Ofgem Regulations for Business Energy Contracts: Your Rights Explained

Ofgem regulates the energy supply market in Great Britain and sets out the rules that energy suppliers must follow when dealing with business customers. These Ofgem regulations for business energy contracts cover how contracts are presented, how suppliers must behave, what rights smaller businesses have, and how disputes are resolved.

The rules differ depending on the size of your business. Microbusinesses and small business consumers have specific protections that larger commercial customers do not. Understanding which category you fall into is the starting point for knowing your rights.

Standards of Conduct

The Standards of Conduct (SoC) set out the minimum standards of behaviour Ofgem requires from licensed energy suppliers when dealing with non-domestic customers. Suppliers must act in a way that is fair, honest, transparent, appropriate, and professional.

In practice this means presenting contract terms clearly, providing accurate billing, responding to queries in a timely manner, and not using misleading or aggressive sales practices. The SoC apply to all non-domestic customers, not just the smallest businesses.

Microbusiness Protections

Ofgem defines a microbusiness as a non-domestic customer that meets at least one of these criteria:

• Fewer than 10 employees (or equivalent full-time staff)

• Annual electricity consumption of 100,000 kWh or less

• Annual gas consumption of 293,000 kWh or less

Microbusinesses have enhanced protections under the SoC. Suppliers must provide renewal terms in writing with a defined notice window, make it easy to compare prices, and allow sufficient time for a business to shop around before the contract renews. Suppliers cannot lock a microbusiness into rollover terms without adequate notice.

Small business consumers – broadly defined as businesses with fewer than 50 employees and annual turnover of no more than £6.5 million – have access to the Energy Ombudsman for independent dispute resolution. If your business falls within this definition, you can escalate unresolved complaints to the Ombudsman at no cost.

TPI Code of Practice

Ofgem’s rules for Third Party Intermediaries (TPIs) – energy brokers, consultants, and comparison services, require that they act in your interest and are transparent about how they are paid.

Under the TPI Code, a broker or energy consultant working on your behalf must:

• Disclose their commercial relationship with the suppliers they present to you

• Tell you how they are remunerated, whether by commission from the supplier or by a direct fee

• Present contract options without favouring one supplier over another purely due to the level of commission paid

• Maintain a complaints procedure and handle disputes in a reasonable time-frame

For microbusiness customers, these disclosure requirements are particularly firm, your broker must present all of this in writing before you sign any contract they have arranged.

Deemed Contracts and Out-of-Contract Rates

If your fixed energy contract ends and you have not arranged a new one, or if you move into new premises without immediately signing a supply agreement, you may be placed on a deemed contract. Deemed contracts are a form of supply agreement that provides continuity of energy, but the unit rates are typically significantly higher than market rates.

Ofgem requires suppliers to publish their deemed rates and treat out-of-contract customers fairly. Suppliers cannot charge prices that are disproportionate compared to their standard contract offerings, and they must make it straightforward for businesses to move from a deemed contract to a fixed term deal.

Contract Renewal and Termination Rights

Energy suppliers must give business customers adequate written notice before a contract rolls over or renews automatically. For microbusinesses, the notice requirements are strictly defined and the window during which you can give notice to leave must be reasonable and clearly communicated.

If you are a larger business, your notice period and renewal terms will be set by the contract itself, but suppliers must still make these terms transparent at the point of sale. Early exit fees must be disclosed clearly and cannot be set at a level that is unreasonably prohibitive.

Ofgem’s rules also require suppliers not to make contract termination artificially difficult. If you have served your notice period, your supplier must facilitate a transfer to a new provider without unnecessary delay.

Energy Ombudsman Access

The Energy Ombudsman provides free, independent dispute resolution for eligible business customers who have been unable to resolve a complaint with their supplier. If your complaint has been open for eight weeks without resolution, or if your supplier has issued a deadlock letter, you can refer it to the Ombudsman.

Small business consumers – businesses with fewer than 50 employees and annual turnover below £6.5 million are covered. Larger businesses above these thresholds do not currently have access to the Ombudsman scheme for energy disputes.

How Catalyst Can Help

As an independent energy consultant, Catalyst operates in full compliance with Ofgem’s TPI Code of Practice. We disclose how we are remunerated on every engagement, tender to a broad supplier panel without preference based on commission, and provide written terms before any contract is signed.

If you want independent advice on your energy contract, your rights under Ofgem’s regulations, or help switching supplier, get in touch with Catalyst.

Talk to Catalyst about your business energy contract →

Related: Energy Procurement Services – how Catalyst manages the full tender and contract process for UK businesses.

Further reading: who supplies UK business electricity sets out the supplier landscape and what differentiates them beyond the regulatory minimum.