Micro-business
What is a micro-business in UK energy?
A micro-business is a regulated category of small energy customer defined by the regulator, Ofgem. A business qualifies by meeting any one of several thresholds based on energy use, employee numbers and turnover, and the classification gives it extra protections when buying energy, including access to the Energy Ombudsman and specific rules on contracts and renewals. Many small businesses qualify without realising it, which matters because the protections only help if you know you are entitled to them.
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In UK energy, micro-business is a regulated category, not a loose description. It’s defined by the energy regulator and it matters because it unlocks protections on contracts, renewals and complaints. The thresholds are generous enough that a surprising number of businesses qualify without realising.
What counts as a micro-business
A micro-business is a small non-domestic energy customer defined by the regulator, Ofgem. The point of the category is protection. Micro-businesses sit closer to households than to large corporates in how much expertise and bargaining power they have, so the rules give them extra safeguards when buying energy.
Crucially, you don’t have to meet every condition. Meeting any one of the thresholds is enough to qualify, which is why so many small firms count even when they don’t think of themselves as especially small.
The exact thresholds
A business is treated as a micro-business if it meets any one of these: it uses no more than 100,000 kWh of electricity a year; or it uses no more than 293,000 kWh of gas a year; or it has fewer than ten employees (or full-time equivalents) and an annual turnover or balance sheet of around £1.7 million or less.
As an illustration, a high-street café using around 35,000 kWh of electricity a year with five staff comfortably qualifies on two counts. Example only; check your own annual kWh against the thresholds. Because it’s any one condition, a low-consumption business with several employees can still qualify on energy use alone.
Why the label matters
Qualifying changes your rights as an energy customer. Suppliers and brokers have to treat micro-businesses to a higher standard than larger commercial customers, and you get access to free, independent dispute resolution that bigger firms don’t. In short, the same contract sold to a micro-business comes with more protection around it.
It also affects the small print. Rules limit how contracts can roll over and how renewals must be communicated, which is meant to stop a small firm being quietly locked into another term or dropped onto expensive deemed rates without warning.
The protections you get
The headline protection is access to the Energy Ombudsman. If a complaint with your supplier isn’t resolved within the set timeframe, a micro-business can take it to the Ombudsman for free, independent adjudication, and the supplier has to abide by the outcome. Larger businesses generally can’t use that route.
Suppliers also have to give micro-businesses clearer information about contract terms, prices and end dates, and follow specific rules on how and when they contact you about renewal. The aim is to make sure a small firm always has a fair chance to act before a contract end date passes.
Contracts and renewals
Micro-business contracts carry rules designed to prevent nasty surprises at renewal. Suppliers must tell you your contract is ending and what happens next, in good time, so you’re not caught out. If a contract does lapse, you fall onto a deemed or out-of-contract rate, which is usually the dearest way to buy energy, so the warnings matter.
The practical takeaway is to treat your contract end date as a live deadline. The protections give you the information and the window to act, but you still have to use them.
Micro-businesses and brokers
Brokers and third-party intermediaries that sell to micro-businesses face specific transparency requirements, including being clear about their role and, increasingly, about how they’re paid. The rules exist because micro-businesses are the customers most likely to take a broker’s recommendation at face value.
It’s a fair question to ask any broker how they earn on your contract. A transparent answer is a good sign. If a broker is reluctant to explain it, that tells you something too.
How to check your status
Start with your annual energy use, since it’s the easiest test. Find your yearly kWh on a recent bill or annual statement and compare it to the 100,000 kWh electricity and 293,000 kWh gas thresholds. If you’re under either, you qualify on consumption alone.
If your usage is higher, check the staff and turnover route instead: under ten employees with turnover or a balance sheet of around £1.7 million or less. Meeting any single test is enough.
Why it matters for you
Knowing you’re a micro-business turns a set of abstract rules into practical leverage. You can insist on the information you’re entitled to, you can hold a supplier to the renewal rules, and you have the Ombudsman as a backstop if a complaint stalls.
It also frames how you buy. The protections reduce the risk of being locked in or overcharged, but they don’t find you a better rate on their own. For that, the usual approach still applies: know your contract end date and compare on the all-in unit rate. Our business energy overview covers the wider picture.
Frequently asked questions
What is a micro-business in UK energy?
A micro-business is a small non-domestic energy customer defined by Ofgem. It qualifies by meeting any one of several thresholds on energy use or staff and turnover, and the category gives it extra protections on energy contracts and complaints.
What are the micro-business thresholds?
A business qualifies if it meets any one of these: it uses no more than 100,000 kWh of electricity a year; or no more than 293,000 kWh of gas a year; or it has fewer than ten employees and turnover or a balance sheet of of around £1.7 million or less.
Do I have to meet all the conditions to be a micro-business?
No. Meeting any single threshold is enough. A low-consumption business with several employees can still qualify on energy use alone, and vice versa.
Why does being a micro-business matter?
It unlocks protections that larger businesses do not get, including access to the Energy Ombudsman, clearer contract and renewal information, and specific rules on how suppliers and brokers can sell to you.
Can a micro-business use the Energy Ombudsman?
Yes. If a complaint with your supplier is not resolved within the set timeframe, a micro-business can refer it to the Energy Ombudsman for free, independent adjudication, and the supplier must abide by the outcome.
How do I know if my business qualifies?
Check your annual energy use first, since it is the simplest test. Find your yearly kWh on a bill and compare it to the 100,000 kWh electricity and 293,000 kWh gas thresholds. If your usage is higher, check the under-ten-employees and around £1.7 million turnover route instead.
Do micro-business protections find me a cheaper rate?
No. The protections cover information, contracts and complaints, not price. To get a better rate you still need to know your contract end date and compare on the all-in unit rate.
What renewal protections do micro-businesses have?
Suppliers must tell micro-businesses that a contract is ending and what happens next, in good time and following specific rules, so a small firm has a fair chance to act before the end date rather than being rolled over or dropped onto expensive rates.
What happens if a micro-business contract lapses?
You fall onto a deemed or out-of-contract rate, which is usually the most expensive way to buy energy. The renewal rules are designed to warn you before this happens, but you still need to act on the notice.
Are there special rules for brokers selling to micro-businesses?
Yes. Brokers and third-party intermediaries that deal with micro-businesses face transparency requirements about their role and how they are paid, because micro-businesses are the customers most likely to rely on a recommendation.
Does the micro-business definition apply to gas and electricity?
Yes. There are separate energy-use thresholds for each: 100,000 kWh a year for electricity and 293,000 kWh a year for gas. Meeting either one qualifies you.
Is micro-business the same as a small business?
Not exactly. “Small business” is a general description, while micro-business is a regulated energy category with set thresholds. A business can be small in everyday terms but fall outside, or inside, the micro-business definition depending on the figures.
Ofgem supply licence conditions (ofgem.gov.uk)