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Business power cuts: Compensation, what to do and how to prepare

Power cuts cost UK businesses money every year through lost trading, spoiled stock and damaged equipment.

This guide covers what to do the moment an outage hits, how business power cut compensation works under Ofgem’s rules, what evidence to keep, and how to prepare your business for the next one.

What causes business power cuts?

Most business power cuts fall into two categories: planned and unplanned. Planned outages occur when your network operator needs to perform maintenance or upgrades, and you should receive notice in advance.

Unplanned outages are unexpected, with the following common causes:

• Faults on the local network, such as damaged cables or equipment failure
• Wider network issues affecting a whole area or region
• Extreme weather, including storms, flooding and lightning strikes
• Third-party damage, for example, construction work hitting underground cables

The cause matters because it affects how quickly power is restored. A local fault is often fixed within hours, while widespread storm damage can take days.

What to do immediately during a business power cut

Here’s a summary of the recommended immediate steps to take in the event of a power loss to your business.

Check whether the outage is isolated to your premises

Establish whether the problem lies with your building or the wider network. Check whether neighbouring businesses or street lighting are also without power. If the surrounding area is affected, it is a local network fault.

If only your premises are affected, the fault is likely internal, and the next step is to check your fuse box.

Check your fuse box for tripped switches

Inspect your fuse box or consumer unit for any switches that have flipped down. If the main switch or an RCD has tripped, reset it. If it trips again immediately, a faulty appliance is the likely cause.

Unplug all equipment on the affected circuit, reset the switch, then reconnect items one at a time to identify the fault. If the switch will not hold with everything unplugged, there is a wiring fault, and you should call a qualified electrician. Never repeatedly force a switch that keeps tripping.

Call 105 to report the outage

105 is the free national power cut line. It connects you directly to your local distribution network operator (DNO), the company responsible for the cables and infrastructure in your area.

Your DNO is separate from your energy supplier, and it is the DNO that will confirm whether the outage has been reported and provide an estimated restoration time. The line is available from most mobiles and landlines across Britain.

You can also find your DNO by entering your postcode on the Energy Networks Association website, which is useful for checking live power cut maps and registering for updates.

Switch off sensitive equipment

Turn off computers, servers, tills and machinery at the plug where possible. Power can be restored with a surge, which risks damaging unprotected equipment.

Leave one light switched on so you know when the supply returns.

Keep fridges and freezers closed

If you hold chilled or frozen stock, keep the doors shut. A fridge should maintain a safe temperature for up to 4 hours, while a full freezer should stay frozen for 48 hours, or around 24 hours if half full.

These are estimates and depend on the appliance and how often it is opened. Note the time the power went off so you can assess whether the stock remains safe once the supply is restored.

Secure your premises and assess staff safety

Electric shutters, automatic doors, alarms and CCTV may all be affected. Secure any entrances that rely on power and assess whether staff can continue working safely, particularly around machinery, in commercial kitchens or in areas with limited natural light.

If safe working cannot be maintained, pause operations until power returns.

Switch to backup power and manage the disruption

If you have a generator or UPS (Uninterruptible power supply), transfer critical systems to it, prioritising tills, phone lines and refrigeration.

Card payments and on-site phone systems are likely to be unavailable, so inform customers of any disruption to trading where practical.

Record the outage timings

Keep a record of when the power went off, when it was restored, and any updates received from your DNO. Accurate records are essential if you claim compensation from your DNO, submit an insurance claim for lost stock or trading, or need to evidence the disruption to customers or suppliers.

What to check once power is restored

Power coming back on is not the end of the outage. Work through these checks before returning to normal trading.

• Reset and test your alarm, CCTV and access systems, as many intruder and fire alarms need a manual reset or code after a power loss.
• Check fridge and freezer temperatures before using or selling stock, and dispose of anything that has been above a safe temperature for too long.
• Restart equipment gradually rather than all at once, starting with critical systems, to avoid overloading circuits.
• Inspect equipment for surge damage, as power often returns with a spike. Anything behaving oddly, failing to start, or tripping circuits should be checked before continued use.
• Reset timers, clocks and programmed settings on heating, machinery and tills.
• Check your phone lines, card machines and internet connection are back up before opening.
• Confirm any backup generators are shut down properly and refuelled, ready for next time.
• Note the restoration time in your incident log to complete your compensation and insurance records

How the business power cut compensation works

Compensation for business power cuts is set by Ofgem under its Guaranteed Standards of Performance.

These rules require your distribution network operator (DNO) to restore supply within fixed timescales and to pay a set amount if it fails.

Payments come from your DNO, not your business energy supplier, and in most cases are made automatically. The table below summarises what you can claim and when.

Source: Ofgem

It is also worth noting that:

• Planned outages themselves do not attract compensation, as your DNO is entitled to interrupt supply for maintenance.
• There is no higher business rate for severe weather payments, and DNOs have longer to pay, typically up to 4 weeks after restoration.
• Standard payments should arrive automatically within 10 working days. If not, you have up to 3 months to claim for unplanned outages.

What business power cut compensation does not cover

Guaranteed Standards payments recognise the inconvenience of losing supply, not the cost of it. They do not cover:

• Consequential losses, including lost trade, spoiled stock, staff costs or missed orders. DNOs are not liable for business losses caused by outages, so these need business interruption insurance.
• Damage to equipment from power surges.
• Faults on your side of the meter, including internal wiring and appliance failures
• Interruptions caused by a national supply shortage, as these are not classed as network faults.

The losses above are typically claimed through a business insurance policy.

What evidence businesses should keep during a power outage

Whether you are claiming compensation from your DNO or making an insurance claim for losses, start collecting evidence as soon as the power goes off.

Here’s a quick checklist of evidence we recommend collecting.

Outage details

• The time the power went off, and the time it was restored.
• Date, time and reference number of your 105 call or online report.
• Screenshots of your DNO’s live power cut map and any updates received.

Photos and video

• Dark premises, unlit signage and equipment out of action.
• The fridge and freezer temperature displays will show once power returns.
• Any damage to equipment following a power surge.

Stock losses

• Photos of spoiled stock before disposal, never after.
• A list of disposed stock with quantities and cost prices.
• Fridge and freezer temperature logs.
• Supplier invoices proving the value of what was lost.

Lost trading

• Till reports or daily takings for the outage period.
• The same figures from previous weeks to show normal trading.
• Records of cancelled bookings, missed orders and staff paid but unable to work.

Incident log

• A short written record of what happened, when, and what you did.
• Key decisions, such as closing early or disposing of stock, with reasons.

Keep everything together and act promptly once power is restored. Compensation claims for unplanned outages must be made within three months, and insurance policies set their own notification deadlines.

Business continuity planning for power cuts

The businesses that cope best with power cuts are the ones that planned for them before the lights went out. A power cut plan does not need to be complicated, but it should cover the following areas.

Build a written power cut plan

Set out who does what when an outage happens, in what order, and who takes charge if the usual person is absent. Include key contacts such as your DNO, electrician, generator supplier, insurer and landlord, and keep a printed copy on site.

Identify critical systems and operations

List the systems your business cannot function without, such as tills and payment systems, refrigeration, security, and phone lines.

Rank them by priority so you know what gets backup power first, and work out how long you can operate without each one. This tells you whether you need a UPS for a safe shutdown, a generator for continued trading, or simply a manual workaround.

Set staff communication procedures

Decide how you will reach staff during an outage, bearing in mind that on-site phone systems and email may be down.

A group message system using mobiles works for most small businesses. Make sure staff know the plan exists, where to find it and what their role is, including who is authorised to close the premises or send people home.

Carry out a power cut risk assessment

Assess how likely outages are at your premises and what the impact would be. Consider your area’s outage history (your DNO can provide this), your exposure to severe weather, and any single points of failure, such as one payment system or one chilled storage unit.

The risk assessment should drive your spending decisions when considering a backup power supply.

Test your procedures

Run a short simulation once or twice a year, walking through the plan with staff and checking that backup equipment actually works, including generator fuel and UPS batteries. Update the plan after every test and after every real outage, using what went wrong as the improvement list.

Backup power and failover options for businesses

There is no single right answer on backup power. The best option depends on what you need to keep running and for how long, from a safe shutdown of your IT through to trading as normal for days. These are the main options.

Uninterruptible power supply (UPS)

A UPS is a battery unit that kicks in instantly when the power fails, keeping connected equipment running for anywhere from a few minutes to an hour or so. It will not keep a business trading, but it protects against the two most damaging effects of a sudden outage: data loss and surge damage.

For most offices, a UPS on servers, computers and phone systems is the sensible minimum, giving staff time to save work and shut everything down safely.

Standby generators

A standby generator is permanently installed, connected to your electrical system and starts automatically when the mains supply fails. It can power an entire premises for as long as it has fuel, making it the standard choice for businesses that cannot afford downtime.

The downside can be cost, installation space and ongoing maintenance, as a generator that is never serviced or tested is unlikely to start when needed.

If you are unsure how much capacity you need, reviewing your business energy consumption is the starting point for sizing any backup system.

Portable generators

A portable generator is a cheaper option suited to powering a handful of essentials rather than a whole site. They need to be started and connected manually, must only ever be run outdoors due to carbon monoxide risk, and should be connected through proper equipment installed by an electrician, never plugged back into a socket.

Portable generators are a more realistic back-up option for microbusiness electricity customers.

Battery storage systems

Commercial solar batteries store power from the grid or from commercial solar panels and switch over automatically when the supply fails.

They run silently with no emissions, which suits offices and retail settings, and they can reduce day-to-day business electricity prices by charging during cheaper off-peak periods.

Runtime is the limitation, as batteries suit outages of minutes or hours rather than days, so larger sites often pair them with a generator.

Combining options

The most resilient setups combine options. A common approach is a UPS for the first few seconds, a generator to carry the load for extended outages, and battery storage where silence or emissions matter.

Start with your critical systems list from your continuity plan and work out the shortest path to keeping those specific items powered, rather than trying to back up everything.

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