Are you a micro business or a non-micro business? And what difference does it make anyway?
When thinking about their business electricity and gas contracts, most business decision makers stay with the same supplier time and time again regardless of whether the rates they are offered are at all competitive against the rest of the market.
This is an unfortunate policy that often leads them to paying significantly more that they should for their business energy.
In fact, according to the energy regulator, Ofgem, business energy customers are less likely to look at switching their energy than domestic customers.
One reason is the lack of comparison services and information when compared to the domestic market, but with different rules for different businesses, it is also the case that the business energy market is much more of a minefield to navigate than the residential market.
One of the key considerations in the business energy market seems to be whether your business is a micro or non-micro business.
Microbusinesses are defined as consuming less than 200,000 kWh of gas or 55,000 kWh of electricity a year, or have fewer than ten employees (or their full-time equivalent) and an annual turnover or annual balance sheet total of €2m or less.
In January 2010, Ofgem made changes to the energy industry regulations to increase protection for micro businesses. However, unfortunately, these regulations do not extend to non-micro businesses, which are still relatively unprotected in the business energy market.
The reason for this different treatment has always remained unclear to us; we vehemently believe that all businesses should have the same rights of clarity and fairness enshrined in their dealings with energy suppliers regardless of their size, turnover or name.
However accepting that Ofgem are in no mood to alter this position, below we attempt to separate some of the fundamental differences business energy consumers need to bear in mind.
Contract terms
Micro businesses
The people who sell the business energy contract, whether a broker or supplier, must make the contracts clear, highlight the key terms and conditions, make the customer aware that the contract is legally binding, and provide a confirmation in writing within 10 days of the contract being agreed.
Non-Micro businesses
None of the above applies
Renewal letter
Micro businesses
Customers must receive a renewal letter around 60 days before the end of their contract with details of the prices that will apply (including the date that the prices will change), any rollover rates that may apply and any out of contract rates that would be levied if the customer refused the agreement but remained on supply.
Non-micro businesses:
None of the above applies
Termination window
Micro businesses
The dates published on your renewal letter will advise when you need to let your supplier know whether or not you wish to remain with them for another contract period.
Non-microbusinesses:
None of the above applies
Roll over
Micro businesses
Customers can advise their supplier any time during their contract that they do not wish to be rolled over. If, however, the customer wishes to terminate their contract, they must adhere to the termination conditions set out in their contract. If they don’t the supplier can invoke a fixed 12-month contract with no exit on uncompetitive rates.
Non-micro businesses:
There is no limit on the length of price of a rollover contract for non-micro business customers.
Back Billing
Micro businesses
Micro business customers are covered by maximum back billing policies of three years for electricity and five years for gas.
Non-micro businesses:
There is no limit to the period a back bill can be applied for to non-micro business customers.
As we have already said we at Business Juice think this is a perverse situation creating a two-tier market.
Our advice would be to, regardless of whether you are a Micro or Non-Micro business to understand your supplier’s policies. Visit our dedicated supplier pages to understand yours and your supplier’s policies and obligations around back billing, termination, roll over and out of contract rates.