How does being a micro business affect your energy contract?

The Alternative dispute resolution scheme (ADR) has been introduced by Energy Regulator, Ofgem and The Energy Ombudsman.

The aim of the ‘Microbusiness Strategic Review’ is to provide better, fairer energy agreements for micro-businesses in the UK. Based on consumer feedback and research, Ofgem has introduced guidelines and restrictions for TPIs/ Brokers and energy suppliers to support microbusinesses when procuring new energy deals.

Initiated in mid-2022, several elements of the overall scheme are now active, which will contribute to the wider aim of providing a better experience to micro businesses within the energy industry. The Microbusiness Strategic Review is a combination of several measures put in place by Ofgem. These measures include Faster More Reliable Switching (FMRS), an Alternative Dispute Resolution scheme (ADR), fee transparency and the removal of termination notices. The aim is to provide protection, support and guidance when navigating the current market.

Due to the current turbulence of the market, the Microbusiness Strategic Review is more important than ever. The main goal of the Microbusiness Strategic Review is to enhance the experience of micro-businesses in the utility market.

No two businesses are the same, so it’s impossible to give an exact figure – factors such as your location, sector and tariff, as well as consumption, will all have an impact.

However, we’ve put together the chart below detailing how much electricity and businesses of a similar size to yours use annually, the average kWh unit price for gas and electricity and the average standing charges to give you a rough idea.

If you are in debt with your energy provider for more than 28 days, you will not be able to switch your micro business energy contract. You will be able to switch energy suppliers once the debt has been cleared.

It is important to remember that you can only switch energy suppliers during your renewal period which is usually one or up to six months before your contract end date.

If you are struggling with your business energy bills and fall into debt with your energy supplier, your energy supply may be disrupted or handed over to a debt recovery agency.

It is highly unlikely that your energy supply will be disrupted but may happen if you have an electricity bill and cannot arrange a payment plan within 30 days of your missed payment.

If your business energy supply is cut off, you may incur a fee that will be added to the total debt amount. In addition to this, there is also a fee to be reconnected.

If you are struggling to pay your business energy bills, you must get in touch with your energy supplier as soon as possible to enquire about support or payment plans they may be able to offer.

Domestic energy refers to the energy used in households, while business energy refers to separate contracts and the energy used by businesses or commercial premises. There are several key differences between domestic energy deals and corporate energy:

Usage

The amount of energy usage in households is much lower than that used in businesses. This is because businesses typically have larger premises, and more equipment, and run for longer hours resulting in their energy consumption being higher.

Tariffs

The energy tariffs for households and businesses are different. Business energy tariffs are usually based on the amount of energy used and the time of day it is used, whereas domestic tariffs are usually based on a fixed rate per unit of energy used.

Metering

Business energy meters are generally more complicated than domestic energy meters, as they need to measure energy consumption for various parts of the business separately. This means that businesses may have multiple meters for different areas, such as lighting and heating.

Energy efficiency

Businesses often concentrate more on energy efficiency than households, as lowering your energy consumption can have a significant impact on your business energy bills. They may invest in energy-efficient equipment, implement energy-saving practices, and conduct energy audits to find areas where they can save energy.

Overall, the main difference between domestic electricity bills and business energy is the level of energy usage, which can have an impact on pricing, metering, and energy efficiency measures.

Microbusiness energy deals typically differ from other SMEs in terms of contract rates, the amount of energy consumed and the level of flexibility and control they have over their energy consumption. Due to their smaller size and lower energy consumption, micro-businesses typically have less bargaining power when negotiating their energy costs and contracts with suppliers. This can limit their options and result in less favourable contract terms compared to larger SMEs.

In addition, micro-businesses often have less control over their energy consumption and are less able to take advantage of flexible pricing options such as time-of-use tariffs or demand response programs. This is because they may not have the same level of energy management expertise or resources as larger SMEs, and may not be able to adapt their energy consumption patterns to take advantage of these options.

Overall, micro business energy contracts tend to be simpler and more standardised than contracts for larger SMEs, with fewer options for customisation or negotiation. However, micro-businesses can still benefit from shopping around for the best deals and looking for suppliers that offer support and advice on energy efficiency measures that can help them reduce their energy consumption and costs.

If your business premises are empty and you have an existing business energy deal, the terms and conditions of your existing supplier contract will still apply, and you’ll be responsible for paying the agreed-upon energy rates and any additional fees or charges. If you’re not using any energy at all, you may still be required to pay a standing charge, which is a fixed daily or monthly fee that covers the cost of providing energy to your business premises. This charge is usually applied to cover costs of switching energy suppliers such as meter readings, maintenance, and network charges, which are incurred regardless of your energy consumption

However, if you believe that your energy consumption has significantly decreased due to reduced usage or workplace closure, you may be able to renegotiate your energy contract with your current supplier or switch to a new supplier with better rates that reflect your current needs. It’s always a good idea to contact your energy supplier to discuss your options and see if there are any changes you can make to your contract to better suit your current situation.

If you’re working from home, it’s likely that your energy consumption will increase, since you’ll be using more gas and electricity bills and heating than you would if you were out of the house during the day. However, whether or not you need a business energy deal will depend on the nature of your work and the terms of your energy contract.

If you’re running a business from home, or you’re using a lot of energy for work-related purposes, you may need to switch to a business energy deal. This is because most residential energy contracts are designed for personal use, and they may not provide the same level of support or flexibility that a business energy contract can offer. In addition, if you’re working from home and using a lot of energy, you may be able to claim tax deductions or other benefits that are only available to businesses.

It’s also worth noting that many energy providers offer exclusive deals for small businesses and self-employed individuals, so it’s worth shopping around to see if you can find a better deal than your current residential energy contract. Ultimately, the decision of whether or not to switch to a new business premises’ energy contract will depend on your circumstances, so it’s worth doing some research and seeking advice from your energy supplier if you’re not sure what the best option for your business gas and electricity is for you.

If you are looking to compare microbusiness energy deals, contact the energy experts at Utility Bidder.

Our energy experts can talk you through competitive quotes from the UK’s leading business energy suppliers and provide you with all the information you need. We will manage the entire switching process for you. Get in touch today to start your business energy comparison.