Ofgem’s New Micro & Small Business Definitions Explained

The journey to net zero can feel like it’s stuck in neutral as you juggle the daily costs of a tough economy and an unpredictable energy market. However, with Ofgem's new small and micro business definitions driving up standards, the road to a more sustainable and fair energy market has just become that little easier to navigate.

Under the new rules, more businesses can now resolve disputes about third parties (like energy brokers) with redress scheme providers, such as the Energy Ombudsman - a lifeline previously only available to micro businesses. Also, the expansion of Complaints Handling Standards to cover Small Businesses as well as Micro Businesses means that more customers will have greater support in the complaints journey. With these updates in place from the 19^th of December, the landscape will become fairer and simpler for small and micro businesses, who will be able to more easily access the right support, clear pricing, and easy dispute handling.

So, what is a micro business defined as?

Up until now the criteria that qualify a business for access to support services like the Energy Ombudsman was limited to micro businesses.

You're defined as a microbusiness if you…

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

However, Ofgem has now created a new small business definition to extend the availability of support to thousands more.

You're defined as a small business if you have…

• fewer than 50 employees or their full-time equivalent, AND an annual turnover of at most £6.5 million or a balance sheet total of at most £5.0 million OR)
• an annual electricity consumption of not more than 200,000 kWh OR)
• an annual gas consumption of not more than 500,000 kWh

What’s prompted these changes?

As Great Britain's independent energy regulator, Ofgem is focused on making sure micro and small businesses receive fair energy prices and dependable services. More recently that’s meant looking into concerns around customer service and complaint handling in the non-domestic energy market. Categorising businesses in this way recognises the difference in size of customers in the non-domestic market, so more protection is available to those who may need it.

For example, a micro business could be a sole trader with limited knowledge of the energy market or resources to be able to dispute something if it goes wrong. According to the Department for Energy Security and Net Zero (DESNZ), when combined with microbusinesses, the new definition of a small business means 99% of the non-domestic market can now take advantage of extra support if needed - that’s at least an additional 200,000 businesses in the UK.

More support, more power

By recognising the unique challenges faced by micro and small businesses, Ofgem is helping make sure no-one is left behind in the transition to a more sustainable energy market. And by understanding your classification, you can better leverage the resources and protections available to you.

Businesses are also empowered to make more informed decisions about their energy consumption and contracts. Staying informed about these definitions and the support available to you can also help boost your operational efficiency and financial health as the energy landscape continues to evolve.

Supporting a greener, fairer future

We've been working towards becoming a net zero business by 2045 and helping our customers get there by 2050. It's why we've supported Ofgem's new rules and regulations, as they align with our own mission to raise industry standards with a focus on you, our customers.

Our goal is to create a greener, fairer future where no-one is left behind. As well as helping to build a low carbon, reliable energy system, we can also help you save money and decarbonise with a range of solutions, including 100% renewable (Zero Carbon) electricity as standard, backed by Renewable Energy Guarantees of Origin from natural energy sources such as solar, wind & hydro.

For more information about how we can help your business move closer to net zero with everything from commercial solar panels to a new energy plan - we’re here to help.

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