New Business Energy Connection UK: Setting Up Gas and Electricity From Scratch

Setting up energy for a new business premises involves two entirely separate processes that many business owners conflate: getting the physical infrastructure connected, and choosing a commercial supplier. The first is handled by the Distribution Network Operator (DNO) for electricity and the gas transporter for gas - regulated monopolies with no commercial competition. The second involves the open energy market, where supplier choice and contract terms vary considerably.

The most common and costly mistake for businesses taking on new or newly built premises is failing to have a supply contract in place from day one. Without one, a deemed contract automatically applies from the first moment of consumption, at rates the supplier sets unilaterally. These deemed rates can run significantly above contracted market rates, and the liability accumulates from the first unit consumed.

New build versus existing premises: different starting points

The connection process differs depending on whether the premises have been connected before.

For existing premises with a live meter and an existing MPAN (electricity) or MPRN (gas), the physical infrastructure is already in place. The task is to arrange supply with a licensed supplier rather than to apply for a new connection. However, if the meter has been de-energised following vacancy or a previous tenant's disconnection, the DNO or gas transporter will need to re-energise it, which requires a separate process and may involve charges.

For new build or newly developed premises with no existing meter or connection, the developer or building owner must apply to the relevant DNO (electricity) or gas transporter for a new connection. This is a formal engineering process involving a connection offer, a quote, acceptance, and scheduled installation. The timeline from application to live connection for a commercial new build is typically several weeks to several months depending on the complexity of the work and grid capacity in the area.

The DNO connection process for electricity

Great Britain's electricity distribution network is operated by regional DNOs. The relevant DNO for a given premises is determined by geography, not by choice. The DNOs are Ofgem-licensed and regulated under the Electricity Act 1989.

The process for a new electricity connection generally follows these stages:

1. Pre-application enquiry: contact the local DNO to discuss the connection requirement, the anticipated load (in kVA), and any network capacity constraints in the area
2. Formal application: submit a connection application with details of the premises, required load, and metering requirements
3. Connection offer: the DNO issues a connection offer specifying the technical solution, the connection charges, and the programme
4. Acceptance and payment: accept the offer and pay any connection charges quoted. For larger loads, a contestable works option allows a licensed independent connection provider to carry out some of the infrastructure work
5. Metering: once the connection is in place, a meter operator (appointed by the chosen supplier) installs the metering equipment. The meter serial number is associated with the MPAN allocated by the DNO

For smaller commercial loads, the connection process is simpler and standardised connection charges apply. For higher-voltage connections (11kV and above), the process is bespoke and more complex.

MPAN and MPRN: what they are and why they matter

The Meter Point Administration Number (MPAN) for electricity and the Meter Point Reference Number (MPRN) for gas are unique identifiers for each supply point. These numbers are essential for:

• Registering the supply point on the relevant central registration system
• Identifying the meter point when contacting suppliers or the DNO
• Obtaining quotes from competing suppliers - every supplier will require the MPAN or MPRN to identify the meter point before quoting
• Transferring supply between suppliers

The MPAN is a 21-digit number, usually shown on electricity bills. For a new connection, the DNO allocates the MPAN. The MPRN for gas is typically an 11-digit number allocated by the gas transporter (Xoserve manages the National Terms of Connection and the central database for gas meter points in Great Britain).

For existing premises where the previous occupant's supplier is unknown, the MPAN can be identified by contacting the local DNO. The MPRN can be identified by contacting Xoserve or by checking any correspondence left by the previous occupant. Both numbers are essential before approaching the market for quotes.

Deemed contracts: the day-one liability trap

A deemed contract is an automatically arising supply contract that takes effect when a customer uses energy at premises without having a formal supply agreement in place. Under the Gas Act 1986 and the Electricity Act 1989, licensed suppliers are required to supply energy to any premises within their distribution area on request, and deemed contract provisions allow them to charge for consumption even without a signed agreement.

Deemed contract rates are set by the supplier and are typically the highest rate they offer. They are designed as a default of last resort, not as a competitive tariff. A business that takes on new premises and begins consuming electricity or gas before arranging a contract will be on deemed rates from day one.

The risks of remaining on a deemed contract include:

• Rates significantly above the contracted market (often 30-50% or more above available fixed-rate contracts)
• No fixed term or price security
• The supplier can change deemed rates with short notice
• The supplier can issue a termination notice requiring the customer to arrange an alternative within a defined period

Ofgem publishes guidance on deemed contracts and suppliers' obligations toward customers on deemed rates, including the obligation to make customers aware they are on a deemed contract and to provide information about how to arrange an alternative.

How to avoid the 8-week deemed-rates trap

The 8-week figure refers to the typical period during which a business on a deemed contract may be exposed before a new supply contract can be activated, if no advance preparation is made. In practice, switching from a deemed contract to a new fixed contract requires:

• Obtaining the MPAN or MPRN
• Obtaining consumption estimates or historical data (for a new build, this will be estimated)
• Approaching suppliers for quotes
• Signing a contract
• The industry transfer process completing - typically 17 working days for electricity, though this may vary

The practical way to avoid excessive deemed-rate exposure is to begin the supplier selection process before the premises are occupied. For new builds, this can be done as soon as the MPAN has been allocated, even before construction is complete. A supply contract can be agreed in advance and activated on the day the premises go live.

Businesses should ask the developer or letting agent for the MPAN and MPRN as early as possible, compare the market using a broker or direct supplier contact, and have a contract in place ready to activate on the occupation date.

Choosing a supplier for a new connection

Once the MPAN and MPRN are known and the premises are ready for supply, the business can approach the commercial energy market. Key steps:

1. Estimate annual consumption - for a new build, base this on the premises size and intended use. Suppliers will provide quotes based on estimated consumption
2. Decide on contract length - commercial contracts typically run 1, 2, or 3 years. Longer terms offer more price certainty but less flexibility
3. Obtain quotes from multiple licensed suppliers - direct contact or through an independent broker. For a microbusiness, the broker disclosure rights described in Ofgem's microbusiness framework apply
4. Check the contract terms for exit provisions, deemed or rollover rate on expiry, and any standing charge arrangements
5. Sign the supply contract before the premises go live if at all possible

The market for commercial electricity and gas supply is competitive. A business with accurate consumption estimates and an MPAN or MPRN in hand is well-placed to negotiate terms from a position of preparation rather than urgency.

Smart meters and half-hourly settlement

For commercial premises, the metering technology installed has implications for both data availability and settlement obligations. Half-hourly metering is mandatory for premises with a maximum demand above 100 kW. For smaller commercial loads, smart meters are increasingly the default installation, providing remote reads and consumption data that can assist with contract management and energy efficiency monitoring.

From April 2017, suppliers have been obligated to offer smart meters to eligible business customers. Premises with smart meters benefit from actual meter reads rather than estimates and can more easily provide consumption data when switching suppliers. For a brand new premises, the meter type will be specified as part of the connection and metering arrangements agreed with the supplier and meter operator.

Frequently asked questions

Editorial disclaimer: This article explains the process for obtaining a new business energy connection in Great Britain as set out in Ofgem guidance and relevant legislation and does not constitute commercial or legal advice for any specific premises situation.

Who is responsible for the physical connection - the DNO or the supplier?

The DNO (or gas transporter) is responsible for the physical network infrastructure up to the meter point. The supplier is responsible for arranging the meter installation (through a meter operator) and for the supply contract. The two roles are entirely separate. Contacting a supplier about a new connection does not progress the DNO application, and contacting the DNO does not arrange a supply contract. Both processes must be progressed independently.

How long does a new electricity connection take for a commercial premises?

For a standard low-voltage commercial connection, the DNO's target timescale is typically 3 to 5 months from application acceptance to live connection, though timescales vary by DNO and by network capacity in the area. High-voltage connections (11kV and above) can take significantly longer. Ofgem publishes performance data on DNO connection timescales as part of its regulatory reporting requirements.

Can a business choose its own DNO?

No. The DNO for a given premises is determined by geography. There is no choice of DNO. However, for certain aspects of connection works (the "contestable" element), a licensed independent connection provider may be able to carry out the work in place of the DNO, potentially at lower cost or faster timescale. The distinction between contestable and non-contestable works is set out in the DNO's connection offer.

What happens if a property has been empty for a long time and the meter has been removed?

If the meter has been physically removed, a new meter installation is required before supply can commence. This involves the relevant supplier appointing a meter operator to install new metering equipment, and the supply point may need to be re-registered on the central systems. For electricity, if the cut-out (the connection from the street to the premises) has also been removed, a new DNO connection application will be needed. The DNO can advise on the current status of the connection infrastructure.

Can a business agree a supply contract before it physically occupies the premises?

Yes, and this is strongly advisable to avoid deemed contract exposure. A supply contract can be agreed in advance and set to commence from the date of occupation or the date the meter goes live. The supplier will need the MPAN or MPRN and an estimated annual consumption figure. Activating the contract on the correct start date is important - any consumption before the contract start date will fall under the deemed contract provisions of whichever supplier holds the registration at that point.

How we verified this

This article draws on Ofgem guidance on business energy supply, deemed contracts, and the role of DNOs as published at ofgem.gov.uk, the Electricity Act 1989 and Gas Act 1986 (legislation.gov.uk), and Ofgem's standard conditions of electricity and gas supply licences. Information on MPAN and MPRN registration reflects the central systems operated under Ofgem-regulated arrangements. No aggregator or supplier-produced content was used as a primary source.

Sources

• Ofgem: Switching and new supply guidance - ofgem.gov.uk
• Ofgem: Licensed suppliers and networks - ofgem.gov.uk
• Electricity Act 1989 - legislation.gov.uk
• Gas Act 1986 - legislation.gov.uk

For more on managing business energy once supply is established, see small-business-energy-guide-uk. For premises changes involving an existing supply, see change-of-tenancy-business-energy-uk.