Energy Price Comparison for Micro Businesses

Microbusinesses play a central role in the UK economy. According to government data, there were over five million microbusinesses in the UK in 2018, accounting for a third of employment and 21% of turnover. Last year microbusinesses paid £3.5 billion in total in electricity and gas bills.

A micro-business in the UK is defined as a business, that:

• employs fewer than 10 employees (or their full time equivalent) and has an annual turnover or balance sheet no greater than €2 million; or
• uses no more than 100,000 kWh of electricity per year; or
• uses no more than 293,000 kWh of gas per year.

In 2017, Ofgem made changes in the contract terms that business energy suppliers provide for these companies so that the renewal and switching of their energy contracts are now mode clearer. Business energy suppliers are not forced to communicate with micro businesses before their contract is up for renewal.

Before this change, the time for switching or negotiating a new contract may have been hidden in lengthy terms and conditions. The contract would renew automatically for another year under more expensive trading terms and was impossible to switch. The change made is for new contracts and is not retrospective.

What Types of Micro Business Tariffs are Available?

There are lot of business energy suppliers in the UK that offer prices for micro businesses to switch their electricity and gas. Most business energy suppliers, however, offer fixed price contracts for micro businesses for the duration of one, two or three years.

It is important to shop around regularly to find the best business electricity and gas tariffs for your business. You need to have an energy supply contract in place (for your electricity and gas) as if you are automatically being renewed, you will see your energy bills go up between 20% to 40% in some cases.

Do contracts for micro businesses differ from other business energy contracts?

For a micro business contract, terms and conditions must be written in ‘plain and intelligible language’ since the business’ owners might not necessarily be familiar with the industry.

Additionally, the supplier must state when the contract begins and ends as part of a ‘Statement of Renewal Terms’. A notice period for termination must also be included, set at 30 days before the end of the contract.

Will I need to provide information to prove my company is a micro business?

Yes. If your supplier does not have the necessary information about your business, you may be asked to provide them with the number of full-time employees, the business’ turnover and its energy consumption.