Energy Consumer Law for Business

Understand Your Rights When Buying Business Energy

Business energy contracts work differently from household energy contracts.

In particular, businesses do not always receive the same protections as domestic customers. However, that does not mean suppliers can simply do whatever they want.

Ofgem regulates business gas and electricity suppliers in Great Britain. In addition, consumer protection is now stronger for smaller businesses, while Ofgem’s Standards of Conduct apply to non-domestic customers of all sizes. (Ofgem)

So, whether you run a small shop, office, café, charity or larger organisation, it is important to understand your rights.

Please note: This page provides general information rather than legal advice. It mainly covers business energy in England, Scotland and Wales. Northern Ireland has a separate energy market and different rules.

Business Energy Is Different From Household Energy

Household energy customers receive a wide range of legal protections.

Business customers have protections too.

However, business contracts are generally more commercial.

For example, a business energy contract can last for up to five years, and most suppliers will not allow you to switch before the contract ends. (Ofgem)

Therefore, before signing a contract, it is especially important to understand:

  • The unit rate
  • The standing charge
  • Contract length
  • Start and end dates
  • Exit rules
  • Renewal terms
  • Broker fees
  • Other charges

Once you agree to a business contract, leaving it may be difficult.

So, check first and sign second.

Ofgem Regulates Business Energy Suppliers

Ofgem is the energy regulator for Great Britain.

Its rules cover both household and business energy markets. (Ofgem)

However, Ofgem does not normally resolve individual disputes between businesses and suppliers.

Instead, the first step is usually to complain directly to the supplier.

Depending on the size of your business, you may then be able to take the dispute to the Energy Ombudsman.

We explain that process later.

Suppliers Must Treat Businesses Fairly

One important protection is Ofgem’s Standards of Conduct.

Since July 2024, these standards have applied to non-domestic customers of all sizes, rather than only microbusinesses. (Ofgem)

In simple terms, suppliers are expected to treat business customers fairly.

Therefore, businesses should receive information and service that allows them to understand what they are buying and what they are being charged.

This protection applies whether the customer is a small local business or a much larger organisation.

Small Businesses Have Extra Protection

Some energy protections depend on the size of the business.

Therefore, you may see two important terms:

Microbusiness

and:

Small business

These classifications matter because smaller businesses can receive extra protections.

For example, they can affect:

  • Back-billing
  • Complaints
  • Energy brokers
  • Access to the Energy Ombudsman

So, it is useful to know which group your business falls into.

What Is a Microbusiness?

Ofgem currently describes a microbusiness as a business with fewer than 10 employees or their full-time equivalent, together with the relevant financial criteria. Energy use can also be used within the regulatory definition. (Ofgem)

Microbusinesses receive some important extra protections.

For example, the 12-month back-billing rules can apply to them.

In addition, there are specific rules around business contracts and renewals.

What Is a Small Business?

The definition used for access to the Energy Ombudsman is wider.

A business may qualify if it has:

Fewer than 50 employees or their full-time equivalent

and either:

Annual turnover of no more than £6.5 million

or:

A balance sheet total of no more than £5 million

Alternatively, it may qualify through energy use if annual consumption is no more than:

200,000 kWh of electricity

or:

500,000 kWh of gas. (Energy Ombudsman)

Therefore, a business can be too large to be a microbusiness but still qualify for important small-business protections.

Understand the Contract Before You Agree

A business energy contract can be a major financial commitment.

Therefore, check the main terms before agreeing.

For example, look at:

Unit rate

How much will each kWh cost?

Standing charge

How much will you pay each day?

Contract length

When does the agreement start and finish?

Exit rules

Can you leave early?

Renewal terms

What happens when the contract ends?

Broker charges

Is a third party being paid for arranging the deal?

These details can make a large difference to the final cost.

Fixed Does Not Always Mean Everything Is Fixed

A fixed business energy contract can provide price certainty.

However, check exactly what is being fixed.

For example, the contract may fix the energy price while allowing certain other charges to change.

Therefore, don’t rely on the word:

“Fixed”

Instead, read what the contract actually says.

If something is unclear, ask for an explanation before agreeing.

Verbal Energy Contracts

Be particularly careful when discussing energy contracts by telephone.

Depending on how the agreement is made, a business can enter into a binding contract without physically signing a piece of paper.

Therefore, do not treat a sales call as an informal conversation if contract terms are being discussed.

Before agreeing, make sure you know:

  • Which supplier is involved
  • The tariff
  • The rates
  • Contract length
  • Start date
  • Exit conditions
  • Any broker fees

If you are not ready to agree, say so clearly.

Business Energy Brokers

Many businesses use an energy broker or other third-party intermediary to find a contract.

A good broker can make comparison easier.

However, you should understand how the broker is being paid.

Ofgem strengthened its rules after concerns about poor practice in the non-domestic energy market.

For contracts signed from 1 October 2024, suppliers must clearly show broker fees within the principal terms for non-domestic customers and make this information available when requested. (Ofgem)

Therefore, ask:

How much is the broker being paid?

Who pays it?

Is it built into my energy rate?

Knowing this can help you judge the true cost of the deal.

Brokers and Redress

Smaller businesses now have stronger protection when dealing with energy brokers.

Since December 2024, suppliers arranging contracts for qualifying small businesses must work with third-party intermediaries that belong to a suitable redress scheme. (Ofgem)

This gives qualifying businesses another route when something goes wrong.

So, before using a broker, check whether it belongs to a recognised redress scheme.

Check Whether the Broker Represents You

A broker may compare several suppliers.

However, that does not automatically mean it searches the whole market.

Therefore, ask:

How many suppliers do you compare?

Do you compare the whole market?

Do some suppliers pay you more than others?

How much commission will you receive from my contract?

This helps you understand the service you are actually receiving.

Your Right to Clear Broker Fees

Broker commission has been a major concern in business energy.

Therefore, transparency is important.

If a broker’s payment is built into your energy contract, the cost may ultimately be recovered through the price you pay.

So, don’t only compare the headline unit rate.

Instead, look at the whole contract.

A deal can appear attractive while still containing significant third-party costs.

Business Energy Contract Renewals

Business contracts do not always simply stop when they reach the end date.

Depending on the contract, you may move onto different terms if you take no action.

For example, a rollover or evergreen contract may continue under existing terms.

However, Ofgem says a microbusiness rollover contract cannot last for more than 12 months. (Ofgem)

Therefore, know your contract end date.

Then start reviewing your options before it arrives.

Keep Your Contract End Date

This is one of the simplest ways to protect your business.

When you sign an energy contract, record:

Contract start date

Contract end date

Notice period

Supplier

Tariff

Then set a reminder well before the contract finishes.

That gives you time to compare your options rather than making a rushed decision.

Deemed Energy Contracts

Sometimes, a business uses energy without having agreed a new contract with the supplier.

For example, this can happen when you move into new premises.

In that situation, you may be supplied under a deemed contract.

Ofgem’s non-domestic licence rules specifically cover deemed contracts. (Ofgem)

However, deemed rates can be expensive.

Therefore, when moving into a property:

First: take meter readings.

Next: find the existing supplier.

Then: tell the supplier you have moved in.

After that: arrange a suitable contract.

Do not simply leave the account unattended.

Moving Into New Business Premises

Take meter readings on the day you become responsible for the property.

Even better, take photographs.

Make sure the photographs clearly show:

  • The reading
  • The meter
  • The date where possible

Next, contact the supplier.

Tell them:

Who you are

When you became responsible

and:

The opening meter reading

This can help prevent you being charged for energy used by the previous occupier.

Moving Out of Business Premises

The same idea applies when you leave.

First, take final readings.

Next, photograph the meters.

Then, give the readings and moving date to the supplier.

Finally, keep the final bill.

This creates a clear record of when your responsibility ended.

Business Energy Bills

Your bill should make it possible to understand what you are being charged.

Therefore, check it rather than simply paying the total.

Look at:

  • Meter readings
  • Energy use
  • Unit rates
  • Standing charges
  • VAT
  • Climate Change Levy where applicable
  • Other charges
  • Contract details

Then compare the bill with your contract.

If something does not match, ask the supplier to explain it.

Estimated Bills

An estimated reading is not necessarily wrong.

However, repeated estimates can cause problems.

For example, the supplier may underestimate use for several months.

Then, when an actual reading arrives, you could receive a much larger bill.

Therefore, provide accurate meter readings where needed.

Smart and half-hourly meters can also help provide better usage data.

Half-Hourly Metering

Some businesses have meters that record energy use every half hour.

This information helps suppliers calculate how much electricity the business has used.

Ofgem says certain businesses can identify this from the first two digits of the MPAN or Supply Number, where numbers such as 05, 06, 07 or 08 may indicate half-hourly settlement. (Ofgem)

This data can also be useful for the business.

For example, it may reveal high energy use when the premises are closed.

Back-Billing Protection

A back bill is a bill for energy used in the past that was not correctly charged at the time.

Microbusinesses receive important protection here.

Ofgem’s back-billing rules mean that a microbusiness will normally not have to pay for energy used more than 12 months earlier where it had not previously received an accurate bill or statement for that energy. (Ofgem)

However, there are exceptions.

When Back-Billing Protection May Not Apply

The protection may not apply if the customer acted unreasonably.

For example, this could include:

  • Blocking access to the meter
  • Preventing the supplier from billing correctly
  • Ignoring requests for payment
  • Stealing energy

Therefore, businesses also have responsibilities.

Keep meter information available and deal with billing problems when they arise.

However, if a microbusiness suddenly receives a bill covering several years, check the back-billing rules before simply paying it.

What If Your Business Cannot Pay?

If your business is struggling with energy bills, contact the supplier early.

Explain the situation.

Then ask what payment options are available.

Ofgem also directs businesses towards independent advice where they are struggling with energy costs. (Ofgem)

Do not simply ignore bills.

Instead, keep communicating.

That can give you a better chance of finding a workable solution.

Disconnection

Business customers do not receive all the same disconnection protections as vulnerable household customers.

Therefore, unpaid business energy debt can become serious.

If you receive a disconnection warning:

Do not ignore it.

Contact the supplier immediately.

Check whether the bill is correct.

Then discuss payment or dispute options.

If the amount is genuinely disputed, make that clear in writing.

The Energy Price Cap Does Not Protect Business Tariffs

The household energy price cap should not be confused with business energy pricing.

Business energy contracts are not covered by the domestic price cap.

Therefore, there is no standard Ofgem household-style cap limiting normal business tariff rates.

This makes comparison particularly important.

Two businesses with similar energy use can pay very different prices depending on their contracts.

Complaining About Your Supplier

If something goes wrong, complain to the supplier first.

Explain:

What happened

Why you believe it is wrong

and:

What you want the supplier to do

Then keep records.

For example, save:

  • Bills
  • Contracts
  • Meter readings
  • Emails
  • Letters
  • Broker documents
  • Call notes
  • Screenshots

Evidence can become very important if the dispute continues.

Small Businesses and the Energy Ombudsman

Since 19 December 2024, qualifying small businesses have been able to use the Energy Ombudsman for eligible disputes with energy suppliers. (Energy Ombudsman)

This is a major protection because it extends independent dispute resolution beyond microbusinesses.

However, you normally need to give the supplier an opportunity to resolve the problem first.

When Can You Go to the Energy Ombudsman?

For an eligible small business, the Energy Ombudsman can normally become involved when:

The supplier has issued a deadlock letter

or:

The complaint has remained unresolved for more than eight weeks. (Energy Ombudsman)

Therefore, make a note of the date when you first formally complained.

That date may become important later.

Energy Ombudsman — Small Business Disputes

What Is a Deadlock Letter?

A deadlock letter means the supplier believes that it cannot resolve the complaint with you.

You do not normally have to keep repeating the same complaint after that.

Instead, if your business qualifies, you may be able to take the dispute to the Energy Ombudsman.

So, keep the deadlock letter.

It is useful evidence that the supplier’s complaints process has reached its end.

Larger Business Disputes

The Energy Ombudsman does not cover every business.

Ofgem says that medium and large businesses that fall outside the small-business route may need to resolve disputes through the civil courts. (Ofgem)

Therefore, larger businesses may need professional legal advice where a serious dispute cannot be settled directly.

This is another reason to check contracts carefully before signing.

Ofgem Does Not Normally Resolve Your Individual Complaint

Ofgem makes and enforces the energy market rules.

However, it does not normally act as the dispute service for an individual business.

Therefore, the usual route for an eligible small business is:

Supplier

↓

Formal complaint

↓

Deadlock or eight weeks

↓

Energy Ombudsman

For larger businesses, legal action may be the next route if the dispute cannot be resolved.

Independent Help for Businesses

Independent advice is also available.

Ofgem points businesses in England and Wales towards Citizens Advice for help with energy contracts and rights.

In Scotland, Ofgem directs businesses towards energyadvice.scot. (Ofgem)

This can be particularly useful if:

  • You do not understand the contract
  • You have received a large back bill
  • You are struggling to pay
  • You have a broker dispute
  • The supplier will not resolve a problem

Getting advice early can prevent a small issue becoming much larger.

Wider Contract Law Still Matters

Ofgem’s energy rules are not the only rules that can matter.

Business contracts are also affected by wider contract and commercial law.

However, businesses generally do not receive all the same protections that an individual consumer receives when buying something for personal use.

Therefore, never assume that a household consumer right automatically applies to your business contract.

If a large amount of money is involved, professional advice may be worthwhile.

Keep Everything in Writing

Business energy disputes often come down to evidence.

Therefore, keep good records.

For example, save:

The original quote

The contract

The principal terms

Broker emails

Broker commission information

Bills

Meter readings

Renewal notices

Complaints

Supplier responses

If something was agreed by telephone, make a note of:

The date

The time

Who you spoke to

and:

What was agreed

Good records give your business much stronger protection.

Be Careful With High-Pressure Sales

Business owners are often busy.

Unfortunately, that can make rushed energy sales particularly effective.

For example, you may hear:

“You need to agree today.”

or:

“This price is only available for the next few minutes.”

Do not allow urgency to replace checking.

Instead:

Stop.

Check the rates.

Check the contract length.

Check the broker fee.

Check the supplier.

Then decide.

A five-minute sales call can sometimes create a contract lasting several years.

Check the Total Cost

A low unit rate can look attractive.

However, it is not the only cost.

For example, also consider:

  • Standing charges
  • Broker commission
  • Contract length
  • Additional charges
  • Taxes
  • Your expected energy use

Therefore, compare the overall expected cost, not simply one number.

Before Agreeing to a Business Energy Contract

Use a simple checklist.

Ask:

  • Who is the supplier?
  • What is the unit rate?
  • What is the standing charge?
  • How long is the contract?
  • When does it start?
  • When does it end?
  • Can I leave early?
  • Are there exit charges?
  • Is a broker involved?
  • How much is the broker being paid?
  • What happens at the end of the contract?
  • What other charges can change?
  • Have I received the important terms in writing?

If the answer to an important question is unclear, ask before agreeing.

Northern Ireland

Northern Ireland has a separate energy market.

Therefore, the Ofgem rules explained above apply to Great Britain — England, Scotland and Wales rather than Northern Ireland.

Business customers in Northern Ireland should use guidance from the Utility Regulator and the Consumer Council for Northern Ireland.

So, if your business is based in Northern Ireland, check the local rules before relying on Great Britain guidance.

A Simple Business Energy Complaint Route

If something goes wrong:

First: check your contract and bill.

Next: gather your evidence.

Then: contact the supplier.

After that: make a formal complaint if the issue is not resolved.

Meanwhile: keep a record of every response.

If your business qualifies and the complaint reaches deadlock or remains unresolved after eight weeks, you may then be able to use the Energy Ombudsman. (Energy Ombudsman)

For larger disputes outside the Ombudsman’s scope, professional advice may be needed.

Quick Summary

Business energy customers have important rights.

However, those rights are not exactly the same as household energy rights.

Suppliers must treat non-domestic customers fairly.

Meanwhile, microbusinesses and small businesses receive additional protections.

These can include:

  • Clearer contract information
  • Broker fee transparency
  • Broker redress
  • Back-billing protection for microbusinesses
  • Formal complaint rights
  • Energy Ombudsman access for qualifying small businesses

However, business contracts can still be long and difficult to leave.

Therefore:

First, understand the deal.

Next, check every important cost.

Then, find out how the broker is being paid.

After that, keep the contract and end date safe.

Finally, if something goes wrong, challenge it early and keep good records.

Most importantly:

Do not assume that being a business means you have no protection.

You have rights.

The key is knowing which protections apply to your business.