When energy prices surge, UK households benefit from some level of protection through the domestic energy price cap – set by Ofgem to limit the maximum unit rate suppliers can charge. However, many business owners are left wondering whether a similar safeguard exists for them. The short answer is no. The energy price cap does not apply to business energy contracts.
Understanding the Energy Price Cap
The energy price cap, introduced by Ofgem in 2019, limits the maximum amount energy suppliers can charge domestic customers on standard variable and default tariffs. As of April 2025, the cap is set at £1,849 per year for a typical household using electricity and gas and paying by Direct Debit. This cap is reviewed quarterly and is adjusted based on wholesale energy prices, network costs, and other factors.
Why Businesses Are Excluded
The commercial energy market operates differently. Businesses – regardless of size – are not covered by the energy price cap. This exclusion stems from the nature of commercial energy contracts where businesses enter bespoke contracts directly with suppliers – often via third-party intermediaries or brokers – without the safety net of a regulated cap.
These contracts can be fixed-term or variable and are influenced by factors such as consumption levels, creditworthiness and market conditions. The absence of a cap means that businesses are exposed to market fluctuations, which can lead to significant variations in energy costs.
A Troubling Trend: Mis-sold Energy Contracts
While business owners seek expert advice to manage rising energy costs, many fall victim to brokers who misrepresent contract terms or hide large commissions in the small print. These brokers may present quotes as informal estimates, only for verbal acceptance to be recorded and used as legally binding consent. This has led to countless SMEs being locked into long-term deals with inflated rates and punitive exit fees.
As Callum Thompson, CEO of Business Energy Claims, explains:
“Far too many businesses across the UK have been taken advantage of by unscrupulous energy brokers operating in an unregulated market. At Business Energy Claims, we’re here to fight for those businesses – to shine a light on unfair practices and help them reclaim money lost through mis-sold energy contracts. Whether it’s hidden commissions, misleading advice, or contracts you didn’t knowingly agree to, our team has the experience and determination to put things right.”
Implications for Businesses
The lack of a price cap means that businesses must be proactive in managing their energy expenses. This market freedom might appear to offer flexibility but, in practice, it has created an environment ripe for mis-selling, where thousands of UK businesses have unknowingly been tied into inflated or unfair contracts by unscrupulous energy brokers.
Without regulatory protection, they are vulnerable to sudden increases in wholesale energy prices, which can have a substantial impact on operating costs. Cornwall Insight’s Business Energy Cost Forecast reveals significant increase in energy expenses for small businesses. The forecast shows a typical small business pays over £5,000 more annually for energy compared to pre-energy crisis levels, with average electricity bills reaching £13,264 – 70% higher than 2020-2021.
Government Support Measures
Recognising the challenges faced by businesses, the UK government has implemented temporary support schemes in the past. The Energy Bill Relief Scheme (EBRS) and Energy Bills Discount Scheme were introduced to help businesses during the height of the energy price crisis, providing discounts on energy bills for non-domestic customers during periods of high wholesale prices. However, such schemes are time-limited and subject to change based on government policy and budgetary considerations. Since the schemes ended in March 2024, no further government support has been given to businesses.
What Can Businesses Do?
In this unregulated landscape, many businesses feel powerless. But if your company has been mis-sold an energy contract – whether through lack of transparency, misleading advice or hidden broker fees – there may be grounds for a claim.
Rather than simply trying to mitigate high costs through efficiency strategies alone, businesses should consider the following actions:
Review Your Existing Contract
Many business owners don’t even realise they’ve been mis-sold. Look closely at your contract – were you made fully aware of the terms, including duration and cancellation fees? Did you receive all the documentation in writing or was it based on a phone call?
Identify Hidden Commissions
Energy brokers often embed their commission within inflated unit rates. This cost is then passed on to your business without disclosure. A forensic review by Business Energy Claims can help uncover these hidden costs.
Assess for Misrepresentation
Were you pressured into agreeing quickly? Did the broker falsely claim that prices were about to rise or that the deal was time-limited? If so, you may have a strong case for mis-selling.
Seek Professional Support
Fighting an energy supplier or broker isn’t easy, especially without legal support. Business Energy Claims specialises in challenging mis-sold business energy contracts, helping recover substantial sums for businesses across a wide range of sectors.
Calculate Your Potential Claim
Check out our free, no-obligation claim calculator. It’s a fast and easy way to find out if you may be owed compensation.
Prevention and Protection
While the lack of an energy price cap for businesses is unlikely to change in the near future, awareness and vigilance are your best defence. Going forward:
- Always ask how your broker is paid – and get it in writing.
- Request full written details of any offer before giving verbal or written consent.
- Don’t rush into contracts under pressure. Take time to compare quotes.
- Consider legal advice if you’re unsure about your rights.
While the energy price cap offers protection to domestic consumers, businesses must navigate the energy market without such safeguards against market volatility or possible unethical broker practices. By understanding the dynamics of business energy contracts and implementing strategic measures, businesses can better manage their energy costs and mitigate the risks associated with market fluctuations.