Micro-Business Regulatory Changes

Switching

The energy regulator, Ofgem, launched a review in February 2018 that focussed on delivering a faster, more reliable energy switching service tailored for residential customers and micro-businesses.

Micro-businesses typically account for fewer than 10 employees per business but as a collective, employ over 4.2 million people. There are 5.3 million micro-businesses in the UK, according to government statistics, representing 95% of all businesses.

The switching programme will go live on the 18th July and will mean non-domestic customers will be unable to switch supply with a start date of 19, 20, 21st July (known as non-switch zone).

What is a micro-business?

To determine if you operate a micro-business, you would need to meet one of the following criteria:

  • You employ fewer than 10 employees & your annual turnover is not more than 2 million euros.
  • Your business uses less than 293,000 kWh of gas per year
  • Your business uses less than 1000,000 kWh of electricity each year.

What has changed?

Historically, micro-businesses had a set period to switch their energy and it varied between each supplier (often between 60 – 120 days). The new rules are that as long as you have 30 days left in on a fixed-term contract, you can tell your current supplier you wish to switch before the notice period begins.

The new switching rules do not apply to SME or large (I&C) businesses.

There are also new rules coming into force throughout 2022. These include

  • Transparency: Fees and associated costs must be clearly explained to micro-business decision makers and third party costs should be explained. This will be implemented from 1st October 2022.
  • ADR: Intermediaries must be members of an Alternative Dispute Resolution scheme which will be funded by fees levied against brokers. This will be implemented on the 1st December 2022
  • Information: More information will be available for micro-businesses to help them make informed decisions about their energy contracts. Ofgem is working with Citizens Advice on this documentation.

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