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Small Business Strategic Review

On the 4th April 2024, the government announced that it has set a new threshold that will enable small businesses to access the Energy Ombudsman.

The Energy Ombudsman provides a “free and impartial service to consumers who have raised an issue with their supplier which could not be satisfied”.

Currently, only businesses with a non-domestic energy contract that meets the definition of a relevant consumer – referred to by Ofgem as microbusinesses – can access the Energy Ombudsman to acquire dispute resolution assistance between themselves and their energy supplier.

The new definition, to sit alongside the existing microbusiness definition, will cover businesses with:

> Either fewer than 50 employees or their full time equivalent and an annual turnover of at most £6.5mn or a balance sheet total of £5mn.
> Or businesses with an annual consumption of electricity of not more than 200,000kWh.
> Or businesses with an annual consumption of gas of not more than 500,000kWh.

The government notes that the updated definition will extend Ombudsman access to approximately 4% more of the UK business population, totalling an additional 200,000 businesses alongside microbusinesses.

It is estimated that 99% of businesses will now be able to seek redress. It adds that the Ombudsman has the power to order suppliers to provide compensation of up to £10,000 or take action to resolve issues.

The government states that businesses will also be able to settle disputes with their energy broker via the Ombudsman to try and reduce rogue energy brokers targeting small organisations. It is hoped that this will help businesses to avoid costly legal proceedings. Subject to Parliamentary approval, it is expected that the change will come into effect by winter 2024.