What defines a micro-business
Ofgem's rules generally define a micro-business as one that uses no more than 100,000 kWh of electricity or 293,000 kWh of gas annually, or alternatively meets the EU definition of a micro-enterprise, being fewer than 10 employees and turnover or balance sheet total below 2 million euros. This is broader than the everyday sense of a very small business and captures many typical SMEs as well.
Confirming micro-business status matters because it unlocks specific consumer protections that suppliers are obliged to apply, regardless of whether the customer is aware of them.
Protections that genuinely apply to micro-businesses
- Suppliers must provide key contract information clearly before a contract is agreed, including price, contract length and cancellation rights
- Contracts cannot automatically roll over onto a new fixed term of more than 12 months without the customer's active agreement
- Notice periods for switching supplier at the end of a fixed contract are capped, typically no more than 30 days before contract end for the termination window to close
- Suppliers must provide contract renewal information in good time before the current deal ends
- There is no price cap on business energy equivalent to the domestic price cap, so rates continue to reflect the wholesale market and supplier pricing
How micro-business energy is priced
Pricing follows the same broad structure as other small consumption bands, combining a unit rate per kWh with a standing charge. Because usage is low, the standing charge can make up a disproportionately large share of the total bill relative to consumption.
Suppliers price micro-business contracts largely on rate card, since consumption is low enough that individual negotiation is rarely cost-effective for either party. Comparing quotes across several suppliers remains the most effective way to find competitive terms.
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Common micro-business energy scenarios
| Business type | Typical annual electricity kWh | Typical annual gas kWh |
|---|---|---|
| Home-based business with small unit | 3,000 - 8,000 | None or minimal |
| Small hair or beauty salon | 6,000 - 12,000 | 0 - 5,000 |
| Very small shop | 8,000 - 15,000 | 0 - 8,000 |
| Single-person consultancy office | 3,000 - 7,000 | 0 - 6,000 |
Avoiding auto-renewal pitfalls
Micro-business customers are protected from being rolled onto lengthy new fixed terms without agreement, but suppliers can still move a lapsed contract onto a deemed or out-of-contract rate, which tends to be significantly more expensive than a negotiated fixed rate. Watching for renewal correspondence and acting before the contract end date remains important.
Keeping a record of contract start and end dates, ideally with a calendar reminder set several months ahead, helps micro-business owners avoid drifting onto costlier default rates.
Complaints and dispute resolution
Micro-business customers have access to the Energy Ombudsman if a complaint against a supplier is not resolved within eight weeks, or sooner if the supplier issues a deadlock letter. This route is not available to larger business customers outside the micro-business definition.