Did you know that 1 in 3 UK households receive their energy from a smaller supplier? The rise of small energy suppliers is increasing each year, providing some of the cheapest energy deals on the market and award-winning customer service. But why are small energy companies better than the ‘big six’?
Who are the Big Six Energy Companies?
In recent years, the big six energy companies have been: British Gas, EDF Energy, Eon, nPower, Scottish Power and SSE. However, nPower has now become Eon and SSE’s Domestic division was acquired by OVO Energy.
So in reality, the big six is now only five. This is the sign of a new hierarchy, with one of the new big five not being an original member of the big six.
The New Big Five Energy Companies
|British Gas||The largest supplier in the UK, providing gas to 11 million homes and 6 million homes with electricity. British Gas is a subsidiary of the Centrica Group, also owning Scottish Gas.|
|EDF Energy||EDF Energy is owned by French provider EDF SA and supply energy to roughly six million homes. They are the UK’s largest provider of low-carbon electricity.|
|E.ON||E.ON is owned by German company E.ON AG and provide energy to 7 million customers.|
|Scottish Power||Another foreign owner, this time Spanish-based Iberdrola. They supply around 5 million residential customers.|
|OVO Energy||OVO Energy are the second biggest UK supplier of domestic gas and electricity. Recently bought the retail division at SSE.|
Why Choose a Smaller Energy Supplier?
The majority of businesses switch to smaller companies for competitive prices. Smaller energy companies usually offer better deals, plus normally have better customer service ratings. Some smaller companies also specialise in green energy, offering a better environmentally friendly plan.
When talking about customer service, smaller energy companies consistently come out as the best. In recent surveys, over 75% of customers supplied by smaller energy companies feel as though they’re getting the best price from their supplier. Just over half of the big six customers believe that they are receiving the best price from their supplier.
Smaller energy companies such as Octopus, Bulb and OVO Energy now sit at the top of customer satisfaction charts. These used to be filled with the big six, but they now lurk towards the bottom of the charts, a huge fall in their standards.
But what are the statistics for reasons why people switch? This chart shows the reasoning.
|Reason For Switching Supplier||Gas||Electric|
|Cheaper or saving money||75%||76%|
|Better customer service||6%||5%|
|Dual fuel package||4%||4%|
Benefits Of Niccolo Gas
Here at Niccolo, we are among the smaller energy companies. We too offer great customer service and competitive prices. But what sets us apart from the rest of the competition is:
- We’re a small company, but all of our contracts are backed by a £1bn company.
- Each customer has a named contact, so you’ll get the best customer service. No call centres, just trustworthy support.
- We understand it can be frustrating speaking to an overseas call centre, so we have removed that issue giving you local employees to assist you.
- We’re privately owned and based in Scotland – Niccolo is proud to be based in Scotland. Many of the big six are based abroad such as Scottish Power: Spanish, EDF: French, Eon and Npower: German. Also, British Gas and SSE are quoted companies, mainly owned by hedge funds.
- Niccolo is a minority-owned business.
- For us, it is a 1 day SLA (service-level agreement) on emails. For the big six, you are typically waiting for 5 days and more.
- We offer 1,2,3 and 4-year contracts, all tailored to your needs.
- Standing charge and no standing charge options.
- We limit the commission that brokers can add, and we don’t pay them upfront.
- We have banned verbal contracts. This is the source for most complaints, with miss-selling being a huge problem across the industry. Other energy companies accept verbal contracts.
What Is the Big Six Market Share?
The market shares for the big six have remained incredibly stable over a large span of years. This was until a recent drop with smaller companies taking a small percentage.
The following graph shows how to market share of the big six domestic electricity supply market shares have changed over the last decade:
As you can see from the graph, back in 2010, the former big six nearly controlled 100% of the market between them. Then, over the last decade, the percentages started to decrease as smaller companies entered the market.
As of 2020, the big six energy companies own under 75% of the market, with some of them owning a very small percentage. We’re expecting this trend to continue in the future as smaller companies offer more competitive deals for customers.
Does Big Six Mean Best Six?
Not always, especially in current times. The big six may supply the majority of energy to UK households, but this does not mean they are better.
In fact, smaller companies usually offer cheaper deals, with better customer service ratings and more incentives.
What Are The Disadvantages Of the Big Six?
We are seeing the big six being mentioned more and more in the press, with customers constantly upset and frustrated with increasing energy prices and poor customer service. Energy prices have more than doubled since 2010.
Trust for the big six has declined due to these rising prices, with Ofgem stepping in to investigate the market. Reports from July 2015 show households in the UK could save £160 per year when switching from a big six energy supplier to a smaller company.
This study has shown that the big six had market power over consumers, creating a two-tier market in the energy industry. These two tiers, based on ‘inactive customers’ with the Big Six had standard variable tariffs. They usually pay higher prices. Then there is a smaller market for ‘active customers’, with smaller companies all fighting to lower prices.
Is It Difficult To Switch To Smaller Energy Companies?
Usually, it is easy to switch energy suppliers. In most cases, a switch can be done in less than 10 minutes, with a couple of weeks to finalise.
This is assuming there are no big outstanding debts on your account and you are the owner of the account.
Before you take the plunge and switch, it always best to get a quote, shop around and compare prices. You’ll gather a better understanding of the market and know which energy supplier suits you best.
Is It Time To Switch From the Big Six?
Data is showing that many UK businesses are not happy with the big six. They’re being overpriced, dealing with poor customer service and being treated just like a number.
Smaller companies like Niccolo offer better prices, improved customer service and you’re made to feel like you’re looked after.
Are There Disadvantages To Switching To A Smaller Supplier?
Typically, there are no disadvantages when switching to a smaller supplier. Some people say it may be a risk due to some smaller companies failing.
However, back in 2019, Ofgem announced stringent checks for any new suppliers. This is to decrease the risk of newer companies failing and ensuring they meet the standards required for energy firms.
Can I Switch To Smaller Energy Suppliers If I Am In Arrears?
If you have been in debt for less than 28 days, you can switch energy suppliers. You will need to repay any owed money if it was due for longer than that.
However, if you are on a prepayment meter, you can switch suppliers if you owe less than £500 for gas and/or electricity.
Why Are There Lots Of Small Energy Suppliers Now?
As shown in the previous graph, the big six used to control nearly 100% of the UK energy market. However, in the last few years, Ofgem announced reforms, giving smaller energy suppliers a chance to compete with the larger companies.
These changes made it easier for customers to change their energy supplier with the Energy Switch Guarantee baked by the Government.
This then allowed smaller companies a chance to thrive, as of May 2019, just under a third of all switches for gas and electricity companies were to smaller and medium-sized energy suppliers.
Do Small Energy Companies Have Good Customer Service?
Lots of smaller energy supplies rank higher on customer service reports. What may come as a surprise is that many of the big six companies actually rank towards the bottom of these surveys.
Uswitch is a reliable source for energy surveys, with over 17,000 UK consumers rating companies in numerous categories. In the recent 2019 survey, there were 8 supplies that scored the best mark of 5 stars out of 5. None of the big six featured in this list.
How Many Energy Suppliers Are There In the UK?
Right now, roughly 60 energy suppliers provide gas and electricity across the UK. This figure fluctuates with companies failing and others merging. In 2018, the number of energy suppliers rose to over 70 companies.
Why Don’t More People Switch Supplier?
With an increase in smaller energy companies on the market, you would think people would change supplier often to get the best deal. However, less than half of UK households have never changed their electricity or gas supplier.
People think it is difficult and takes a long time. Some think you’ll need new pipes and cables installed and can be a huge hassle.
This is wrong, as it takes under 10 minutes to change supplier. Lots of UK customers are missing out on a great opportunity to save money and be greeted with fantastic customer service and lots of benefits with smaller companies.