How the market treats small businesses differently

If you’ve switched energy at home, forget most of what that taught you. There’s no public price list for business electricity or gas, no dual fuel discount, and no 14-day cooling-off period once you’ve signed. Every contract is priced for your specific meter, your usage and your credit profile, and it binds from the moment you agree it, sometimes on a recorded phone call.

That sounds harsher than it plays out day to day. Business contracts are usually cheaper per unit than domestic ones because you’re buying at commercial rates without the domestic price cap machinery. The catch is that the market assumes you know what you’re doing, and a small business owner doing this once every couple of years is the least-served customer in it.

The regulator knows this, which is why the smallest businesses get their own tier of protection. That tier has a name, and it’s worth knowing whether it covers you.

What counts as a micro business, and what it gets you

Ofgem treats you as a micro business if you meet any one of these tests. Fewer than ten employees (or their full-time equivalent) with annual turnover or balance sheet no more than £2 million. Or annual electricity use of no more than 100,000 kWh. Or annual gas use of no more than 293,000 kWh. Most cafés, salons, shops and small offices fall comfortably inside at least one of them.

Qualifying changes real things. Suppliers must show your contract end date and notice period on your bills, so you can’t lose track of the renewal window by filing the paperwork. You can serve termination notice at any point up to the end date rather than being caught by a 30-day notice trap. Faster switching rules mean the move itself should take about five working days. And if a broker or comparison site mishandles your contract, there’s a free alternative dispute resolution scheme built for exactly that argument.

Taking on new premises, and the deemed rates trap

The most expensive energy most small businesses ever buy is the energy they never agreed a price for. Move into premises without arranging a contract and you’re automatically supplied on a deemed contract, at rates typically far above anything negotiated. It happens quietly. The lights work on day one, the first bill takes weeks to arrive, and by then you’ve paid default prices for the whole period.

The fix is undramatic. Deemed rates carry no exit fee and no notice period, so you can move to a proper contract as soon as you like. If you’ve just taken keys somewhere, sorting the energy in the first week genuinely pays for the admin time many times over. Our change of tenancy guide walks through the process step by step.

The 5% VAT check most small businesses miss

Business energy normally carries 20% VAT. But under the de minimis rules, low usage is billed at 5% instead, and it escapes the Climate Change Levy entirely. The thresholds are averages across the billing period. Up to 33 kWh of electricity a day, which works out around 1,000 kWh a month, and up to 145 kWh of gas a day.

A one-room office, a market stall unit or a part-time studio can sit under these lines without anyone noticing. Suppliers are supposed to apply the reduced rate automatically, and often they do. Often enough they don’t, and the difference between 20% and 5% on a year of bills is not small change for a business that size. Check the VAT line on a recent bill against your actual usage. If it’s wrong, you can claim the difference back, and our guide to VAT on business electricity covers how.

Charities and businesses where a portion of use is domestic (a flat above the shop on the same meter, say) can also qualify for the reduced rate on that portion. Worth a conversation with your accountant if either applies.

Standing charges matter more when you’re small

Every quote has two prices. The unit rate you pay per kWh, and the standing charge you pay every day the meter exists, trading or not. The less energy you use, the more of your annual bill the standing charge quietly becomes, and a tempting unit rate can hide a daily charge that wipes out the saving for a low-usage site.

An illustrative example. A small salon using 8,000 kWh a year is offered 24p per kWh with a £1.20 daily standing charge, or 26p with a 35p daily charge. The first quote looks better by 2p. Run the year and the first comes to about £2,360, the second about £2,210. The dearer-looking unit rate saves roughly £150 because the standing charge does less damage at low usage.

Always compare the estimated annual cost, never the headline rate. It’s the single habit that protects small accounts.

Getting quotes without giving up your afternoon (or your phone number to the wrong people)

You need three things to get an accurate quote. A recent bill, your annual consumption in kWh, and your contract end date. All three are on the bill itself, and our bill guide shows where. With those in hand, a quote is a price. Without them, it’s a guess that gets corrected later.

Be deliberate about where you enter your details. Some lead-generation sites sell enquiries on, and the cold calls that follow are the single most common complaint small business owners have about this market. Use a named company you can hold to account, ask how much of the market they quote from, and ask how they’re paid. Anyone reasonable answers both in writing. We publish ours on how we make our money, and there’s a fuller walkthrough in our guide to comparing business energy quotes.

What actually moves the price for a small account

Small accounts have less negotiating leverage than a factory, but the price still isn’t fixed by fate. Contract length shifts it, with longer terms usually buying certainty rather than the sharpest rate. Paying by direct debit is often priced better than paying on receipt of invoice. Your business credit record feeds the rate too, and a supplier that doesn’t like what it sees may ask for a deposit or simply quote high. Timing matters most of all, because wholesale prices move daily and a renewal agreed in a calm market week beats one signed in a spike. Our guide on when to renew covers how far ahead you can lock a price.

The thing that moves the price most, though, is simply not letting the contract lapse. Out-of-contract rates sit far above negotiated ones, and every month spent on them undoes the savings of a well-timed switch.

Shared buildings and landlord-controlled supplies

Plenty of small businesses don’t control their own meter. In serviced offices, indoor markets and some leased units, the landlord holds the supply contract and recharges you, either through the service charge or an itemised bill. In that setup you can’t switch supplier yourself, but you can ask how the recharge is calculated, whether it’s based on a submeter or a floor-area split, and what rate you’re being recharged at. Landlords recharging electricity are generally expected to pass it on at cost rather than with a margin, so the numbers are a fair thing to ask about.

If you have your own meter and your own supply, the contract is yours to arrange even in a shared building. Check which situation you’re in before you spend any time comparing, because everything else in this guide rests on the answer.

Grants and government support, honestly

Search results are full of energy support schemes that no longer exist, so here’s the current picture as of mid-2026. The universal bill support schemes from the 2022 to 2024 energy crisis have closed. The government’s newer support, the British Industrial Competitiveness Scheme, cuts electricity costs for energy-intensive manufacturers from 2027 and won’t reach a typical shop or office.

What’s realistically available to a small business now is narrower but real. Reduced VAT and CCL relief at low usage, as covered above. Local and regional energy-efficiency grants, which come and go by area and are worth checking through your local authority and Growth Hub. Some suppliers run hardship funds and payment plans for struggling business customers, and asking for one is a phone call, not an application process. And efficiency itself, unglamorous as it is, remains the one saving nobody can withdraw. If a scheme or grant matters to your plans, check it on gov.uk directly rather than relying on an article, including this one, because this corner of policy changes quickly.

If something goes wrong

Complain to the supplier first, in writing, and keep it factual. If eight weeks pass without resolution, or you reach deadlock sooner, small businesses now have somewhere independent to go. Since 19 December 2024, the Energy Ombudsman accepts complaints from businesses with fewer than 50 employees (or meeting turnover or consumption tests), and it can make awards of up to £20,000. It’s free, and suppliers are bound by the outcome.

For disputes about how a broker or comparison site handled your contract, micro businesses have a dedicated free ADR route as well. The days of a small firm having no realistic comeback in this market are genuinely behind us, which is worth knowing before a dispute rather than during one.