What is a microbusiness for energy?

"Microbusiness" is an Ofgem term, not an everyday one. It decides which protections you get from energy suppliers and brokers, so it is worth knowing which side of the line you fall on. A business can meet the definition for electricity and not gas, or the other way round.

The three tests (you only need to pass one)

Test	Threshold
Staff and money	Fewer than 10 employees (or full-time equivalent) and annual turnover or balance sheet total of no more than 2 million euros (Ofgem has given the sterling equivalent as roughly £1.7 million to £1.8 million)
Electricity use	Under 100,000 kWh a year
Gas use	Under 293,000 kWh a year

Ofgem's pages word the usage thresholds slightly differently in places ("under" or "no more than"). If your use is close to a line, ask your supplier how it has classified you.

Worked examples

• Café, 6 staff, £420,000 turnover. Passes the staff and money test, so it is a microbusiness for both fuels whatever its usage.
• Engineering workshop, 28 staff, £3.1m turnover, 80,000 kWh electricity, 350,000 kWh gas. Fails the staff test. It passes the electricity test (80,000 is below 100,000), so it is a microbusiness for electricity. It fails the gas test (350,000 is above 293,000), so it is not a microbusiness for gas. It is, however, a small business for both fuels (see below).
• Charity with 4 staff and £1.5m income. Passes the staff and money test.

Our small business electricity use guide helps you see where you sit, and the gas units to kWh converter turns meter readings into kWh.

Where small businesses fit

Since 19 December 2024 there is a second category, "small business", used for Ofgem rules on broker dispute schemes and Energy Ombudsman access. You are small if you pass any one of:

• fewer than 50 employees, and turnover of no more than £6.5m or a balance sheet total of no more than £5m;
• electricity use of no more than 200,000 kWh a year;
• gas use of no more than 500,000 kWh a year.

Every microbusiness is also a small business, but not the other way round.

Protections you get as a microbusiness

• Principal Terms. Suppliers and brokers must bring the main contract terms to your attention before you sign and confirm them in writing. Where a broker is paid via your bills, the total cost over the contract must be shown in pounds and pence. For contracts signed from 1 October 2024 that disclosure applies to all business sizes.
• No notice to switch. Since 1 October 2022, a supplier cannot require a microbusiness to give notice before switching, except under an evergreen contract (up to 30 days).
• Rollovers limited. A supplier can only roll you onto a new fixed term if it has met the renewal-information requirements, you have not served notice to stop it, and the new term is 12 months or less.
• No termination fee out of contract.
• Backbilling limit. Suppliers generally may not bill for energy used more than 12 months ago, with exceptions such as tampering or obstructing meter reads. This applies to domestic and microbusiness customers only.
• Brokers in a dispute scheme. Suppliers may only work with brokers that belong to a qualifying dispute scheme.
• Ombudsman access. You can take an unresolved complaint to the Energy Ombudsman.
• Signposting. Suppliers must point you to Citizens Advice for free help.

There is still no cooling-off period for microbusinesses. Ofgem consulted on one and did not introduce it.

For a wider view, see what extra protections microbusinesses get and Ofgem rules for business energy.

How to find out how your supplier classes you

1. Check your contract and Principal Terms.
2. Look at the annual consumption figure on a recent bill. See AQ (gas) and EAC (electricity).
3. Ask the supplier in writing which category applies to each fuel.
4. If you disagree, explain why, pointing to your staff numbers, turnover or usage.

Common questions

Do I count if I work from home?

Most home workers stay on a domestic contract.

Does being a landlord or charity change this?

The test is about size, not sector, though VAT and other rules differ. See our landlord guide.

What if my usage grows?

Your classification can change, so check at each renewal.

Why the classification can be wrong

Suppliers sometimes class customers using the usage estimate on their system rather than a full check of staff numbers and turnover. That is why two nearby shops can be treated differently. If your supplier has put you in a larger category than you think you belong in, you can ask for a review. Gather the facts first: payroll headcount (full-time equivalent), last accounts' turnover or balance sheet total, and your annual kWh for each fuel.

Exchange-rate wrinkle

The financial test is set in euros (2 million), so the sterling equivalent moves with exchange rates. Ofgem has described it as roughly £1.7 million to £1.8 million. If you are near the line, ask the supplier which figure it uses.

Why it matters for brokers

Whether you are micro or small also decides which broker rules apply. Brokers selling to microbusinesses have had to belong to a qualifying dispute scheme since 1 December 2022; for small businesses the same requirement began on 19 December 2024. See are energy brokers regulated?

Borderline example: a growing bakery

A bakery has 14 staff, so it fails the staff test. Its electricity bill shows 96,000 kWh over the last 12 months, just under the 100,000 kWh line, so it is a microbusiness for electricity. If a new oven adds about 600 kWh a month, next year's use would be 96,000 + (600 × 12) = 103,200 kWh, over the line. It would then be a small business for electricity (under 200,000 kWh) rather than a microbusiness, and would lose the 12-month backbilling limit, though it would keep access to the Energy Ombudsman. That is why checking your category at each renewal matters.

Why size can change your quote

Suppliers price risk by customer type. A microbusiness with a small, predictable load is often quoted on a standard rate card, while a larger user may be quoted individually. Being classed correctly means you are shown the right products and cover. Keep your evidence (accounts, payroll, bills) handy when you ask a supplier to review your category.

Next steps

• Work out your annual kWh from a recent bill.
• Ask your supplier to confirm your category in writing.
• Read the microbusiness glossary entry and the guide to contract types.