The majority of small businesses in the UK are micro businesses, making up 96% of the UK’s estimated 5.7 million SMEs, and if you’re a micro business owner, there’s a good chance you’re paying too much for your gas and electricity.
An investigation from Ofgem, the energy regulator, found that the smallest businesses struggle to engage in the energy market, and so a series of regulatory reforms were put in place to protect micro businesses from ‘rip off’ energy prices.
There’s no single definition of what makes a microbusiness - the Office for National Statistics’ definition is slightly different from the EU’s definition, while HMRC often doesn’t distinguish micro businesses from other small businesses.
For the purposes of energy contracts though, the only definition that matters is the one set out by Ofgem, which states that, to be classed as a micro business, your enterprise must meet at least one of the below:
Rollover contracts are a bit of a problem for business owners – if you fail to agree new business energy contract or switch to a new supplier before your current deal expires, you may be automatically signed up for another year with your existing provider.
This type of deal is known as a ‘rollover contract’ and, to make matters worse, the rates on offer are never competitive.
The good news is, Ofgem regulations give you and your business more protection against rolling over onto a new contract when your current contract comes to an end.
Here’s how you these regulations could help your business get a fairer energy deal:
This means key clauses may no longer be hidden in the small print of the contract, and suppliers must make you aware of any conditions relating to the contract and that may influence whether you enter into the contract or not.
Previously, if a contract had been agreed over the telephone, it’s unlikely you would ever have received hard copies of the terms and conditions relating to the contract. This means you’d probably have been unaware of the termination notice period for the contract and any ‘roll over’ clauses.
Around 60 calendar days (but no longer than 120 days) before the end of the fixed term period suppliers must now send you a statement of renewal terms and details of the key terms and conditions.
Included in this, suppliers must let you know what will happen if:
Once you receive these renewal terms, your contract will enter its ‘notification window’, which means you then have 30 calendar days in which to contact your current supplier to negotiate new terms for a new contract. If the supplier offers you a new deal, this must be presented in writing and remain valid until the end of the notice period.
If you don’t contact your current supplier in writing during this window, the contract can be automatically rolled over for a maximum of 12 months, provided the supplier has already given the statement of renewal terms.
So, to avoid being automatically rolled over onto a new contract, you need to write to your supplier at any point from when you agree the fixed term contract to the end of the notification window. If you want to cancel the contract and switch to a new supplier, you need to do so in accordance within the terms of the contract.
To make things easier, once you get your renewal notification, get in touch with our energy experts at UKPower, and we’ll handle the switch for you. Give us a call on 0800 326 5517, or leave your details here and we’ll give you a call back.
In short, suppliers must now make sure you are aware well in advance of when you need to take steps to agree to a new deal or terminate the contract, and what will happen you take no action after you get this statement of renewal terms.
You will need to speak to your supplier and send them any supporting evidence that you think qualifies your business under the conditions for a micro-business.
If you sign a new contract through an energy broker or Ofgem approved comparison site, you’ll still be protected under the regulations because it is the supplier that has the responsibility of ensuring that all the necessary information is provided when you sign a new contract.
This also applies to signing a contract through an Ofgem approved comparison site.
There are few more things you need to look out for when signing a new energy deal, including:
If that all seems like a bit too much hassle, give our energy experts a call on 0800 326 5517, leave us a few details and we’ll give you a call back.