Microbusiness Energy Rights UK: Ofgem Protections You May Not Know

TL;DR

Microbusinesses get a distinct set of Ofgem protections not available to larger business energy customers, including the right to a supplier cooling-off period, broker disclosure requirements, and access to the Energy Ombudsman. The definition turns on employee count and energy consumption, not turnover.

Last reviewed: 12 May 2026

Most business energy customers have considerably fewer legal protections than domestic consumers. A large commercial tenant negotiates from a position of assumed sophistication and has no access to the Energy Ombudsman. For very small businesses, however, Ofgem has defined a protected category - the microbusiness - with its own set of supply licence conditions designed to address the specific vulnerabilities of very small operators who may lack the resources to navigate complex energy markets.

These protections are not widely advertised. Suppliers are not required to prominently inform microbusiness customers of their rights. Many small business owners are unaware they qualify, and some suppliers have faced enforcement action for failing to honour the obligations. This article sets out the definition, the protections, and the routes to redress.

The Ofgem definition of a microbusiness

Ofgem's definition of a microbusiness customer, as set out in the standard conditions of electricity and gas supply licences, requires a customer to meet at least one of the following criteria:

Fewer than 10 employees (or full-time equivalent), or
Annual electricity consumption below 100,000 kWh, or
Annual gas consumption below 293,000 kWh

A business meeting any one of these three conditions qualifies as a microbusiness for Ofgem regulatory purposes, regardless of its legal structure or turnover. A sole trader, a partnership, a limited company, and a charity can all qualify. The threshold is notably more generous than the Companies Act definition of a small company: a business with 8 employees and £5 million turnover qualifies as an Ofgem microbusiness even though it exceeds the 40,000 kWh ESOS de minimis.

The classification applies independently for electricity and gas. A business might qualify as a microbusiness electricity customer but not a microbusiness gas customer if its gas consumption exceeds 293,000 kWh. Protections apply separately to each fuel.

Contract renewal protections

One of the most practically significant microbusiness protections concerns contract rollovers. Ofgem's supply licence conditions require that, where a fixed-term contract is due to expire, the supplier must:

Give the microbusiness customer adequate notice of the upcoming renewal date
Provide clear information about the terms that will apply after the contract ends, including any deemed or rollover rate
Not lock the customer into a new fixed-term contract without their informed agreement

Suppliers must send renewal notification within a defined window before the contract end date. If a supplier fails to provide adequate notice and the customer is subsequently rolled onto unfavourable terms, the customer has grounds to raise a complaint that may result in the supplier releasing them from those terms.

The specific notice window has been tightened by Ofgem as part of updates to the supply licence conditions. Microbusiness customers should check the current version of the relevant licence standard conditions for the precise timing requirements that apply to their contract.

Broker disclosure requirements

Energy brokers (also called third-party intermediaries or TPIs) arrange business energy contracts on behalf of customers, often receiving a commission from the supplier for each contract placed. For microbusiness customers, Ofgem licence conditions place specific obligations on suppliers regarding broker transparency:

Suppliers must ensure that microbusiness customers are told, before a contract is agreed, that the supplier may pay commission to any broker involved
The customer must be given the means to find out the amount of commission payable or the method by which it is calculated
Suppliers cannot enter into contracts with microbusiness customers where the broker has not complied with these disclosure requirements

These obligations sit on the supplier, not solely on the broker. A supplier that enters into a microbusiness contract through a broker that did not make proper disclosure is in breach of its licence conditions. This is significant because it gives the microbusiness customer a direct route to raise the matter with the supplier and, if unresolved, with the Energy Ombudsman, without needing to pursue the broker separately.

Ofgem has investigated and taken enforcement action against suppliers for failures in broker disclosure. Businesses that believe commission was not properly disclosed before signing a contract should document what they were told and raise a formal complaint.

Access to the Energy Ombudsman

The Energy Ombudsman (administered by Ombudsman Services) provides free alternative dispute resolution for energy complaints. Access to the Ombudsman is available to domestic customers as a matter of course. For business customers, access is restricted - most commercial customers have no right to refer a dispute to the Ombudsman.

Microbusiness customers are an exception. An Ofgem-defined microbusiness customer can refer an unresolved complaint about its electricity or gas supplier to the Energy Ombudsman if:

The customer has raised a formal complaint with the supplier, and
Either the supplier has issued a final response the customer considers unsatisfactory, or eight weeks have passed since the complaint was raised without a final response (the "deadlock" position)

The Ombudsman can award financial remedies, require the supplier to apologise, and require remedial action. Awards are binding on the supplier if the customer accepts the determination. The Ombudsman cannot award compensation for consequential business losses, only for direct financial loss, inconvenience, and distress as appropriate.

Billing accuracy and dispute rights

Microbusiness customers benefit from specific protections relating to billing disputes. Suppliers must:

Respond to billing queries within a defined timeframe
Not threaten disconnection for disputed amounts while a complaint is live
Follow Ofgem-mandated processes for resolving meter disputes

Estimated billing is a common source of disputes for small businesses, particularly those in premises with hard-to-access meters. Microbusiness customers should submit regular actual meter readings to avoid estimated bills accumulating, and should formally dispute any estimated bill that appears significantly inaccurate rather than simply paying it.

Where a billing error results in a debt being demanded, microbusiness customers have the right to ask the supplier to apply the back-billing principle. Under Ofgem's back-billing rules (which apply to microbusinesses as well as domestic customers), suppliers cannot recover charges for energy used more than 12 months before the date of the corrected bill, where the supplier was responsible for the billing error.

Switching rights and exit fees

A microbusiness customer on a fixed-term contract that has not yet expired may face an early termination charge if they want to switch supplier. Ofgem's protections in this area are more limited: exit fees are permitted under fixed-term contracts. However:

Suppliers must ensure that the contract terms, including any exit fee, were clearly disclosed before the contract was signed
Exit fees must be reasonable and must be disclosed in the tariff information label or contract summary provided at point of sale
Microbusiness customers may have grounds to challenge an exit fee if the contract was mis-sold or if broker disclosure obligations were not met at the point of sale

Out-of-contract customers (those without a fixed-term agreement in place) can switch at any time without penalty. Microbusiness customers in this position should be aware that out-of-contract rates are typically the highest available rate from that supplier.

Complaints procedure and escalation routes

The formal complaints process for microbusiness customers follows a defined path:

Raise the complaint in writing (email is sufficient) with the supplier's complaints team, clearly stating it is a formal complaint
The supplier must acknowledge the complaint and work toward a resolution within eight weeks
If the complaint is not resolved within eight weeks, or if the supplier issues a final response the customer considers unsatisfactory, the customer can refer the matter to the Energy Ombudsman
If the complaint involves a broker, raise it with the supplier (who is licence-obligated) as well as the broker directly
For complaints about Ofgem licence condition breaches - for example, systematic failure to disclose broker commissions - the matter can also be reported to Ofgem, which has enforcement powers against suppliers

Keeping a written record of all communications, including dates, names of individuals spoken to, and the substance of calls, strengthens any complaint or escalation significantly.

Frequently asked questions

Editorial disclaimer: This article explains Ofgem's microbusiness protections as set out in supply licence conditions and does not constitute legal or commercial advice for any specific business energy situation.

Does a sole trader automatically qualify as a microbusiness for energy purposes?

A sole trader with no employees qualifies under the "fewer than 10 employees" criterion by default. However, a sole trader with very high energy consumption - for example, a rural agricultural operation using more than 100,000 kWh of electricity and more than 293,000 kWh of gas annually - would not qualify on consumption grounds alone. The fewer-than-10-employees criterion is met independently, so such a customer would still qualify. Meeting any one of the three criteria is sufficient.

Can a supplier charge a microbusiness more than a larger business for the same energy?

Ofgem does not set or cap business energy prices. Suppliers can price microbusiness tariffs at any level, and there is no obligation to offer the same rates as those available to larger commercial customers. The protections for microbusinesses relate to contract terms, disclosure, and dispute resolution - not to price levels. Comparing the market before contract renewal is the primary tool available to manage price.

What if a broker denies receiving commission from the supplier?

Suppliers, not brokers, carry the primary licence obligation for commission disclosure to microbusiness customers. If a broker denies receiving commission and the customer believes commission was paid, the customer should request written confirmation from the supplier about what commission was paid to any third party involved in arranging the contract. Suppliers are required to cooperate with such requests from microbusiness customers.

How does the back-billing rule work for business customers?

Ofgem's back-billing rule prevents suppliers from recovering charges for energy used more than 12 months before the date of the corrected bill, where the supplier was responsible for the delay in billing accurately. The rule applies to microbusiness customers as well as domestic customers. It does not apply where the customer caused the billing error - for example, by obstructing meter access or providing false reads.

Is the Energy Ombudsman the only route for microbusiness disputes?

The Energy Ombudsman is the statutory alternative dispute resolution scheme for microbusiness complaints about suppliers. Customers can also pursue small claims court action for financial losses, contact Ofgem to report systemic licence breaches, or seek legal advice for larger disputes. Citizens Advice provides free guidance to business customers as well as domestic consumers. The Ombudsman route is generally faster and lower-cost than court action for straightforward billing or contract disputes.

How we verified this

This article draws on the standard conditions of electricity supply licences and gas supply licences as published and administered by Ofgem at ofgem.gov.uk, and on guidance from the Energy Ombudsman (Ombudsman Services) at ombudsman-services.org. Licence conditions referenced reflect the versions current as of the last review date. No aggregator content was used as a primary source.

Sources

For more on comparing business energy contracts, see business-energy-comparison-uk. For information on contract renewals, see business-energy-contract-renewals-uk. If a contract was mis-sold, see mis-sold-business-energy-claim-uk.