Is the big six’s grip starting to slip?

An energy meter
Is it time you made a switch?
“Vigorous competition is the best way to keep consumer bills as low as they can possibly be" The Department for Energy and Climate Change
  • | by Kristian Dando

The ‘big six’ energy companies exert a python-like stranglehold on the UK’s gas and electricity sector –  97% of the marketplace, according to the latest figures from Ofgem.

But it seems that consumers have finally had enough of their antics, with last autumn’s round of price rises a step too far.

In fact, an exodus to smaller energy firms could be in the pipeline, with new research from Gocompare.com finding that 30% of households expect to make a switch from the big six in the next three years.

Smaller energy companies, which often offer very different propositions to the big six, account for just 3% of the market. This is despite routinely trouncing their bigger rivals in the annual Which? energy satisfaction survey.

The government believes that smaller energy companies may well hold the key to a healthier energy market. “Vigorous competition is the best way to keep consumer bills as low as they can possibly be,” said a Department for Energy and Climate Change spokesman. “Competition forces companies to keep costs down and treat their customers fairly. The government wants to see a market that is open to the widest possible range of business models in order to boost competition, keep down prices and enable innovation.”

But despite trust in the big six energy companies being at an all-time low (just 4% of people think that the firms work hard to keep bills down for households, according to Gocompare.com) many consumers are still wary of making the switch. They might be wary of a smaller company's reputation because they’ve never heard of them, in some cases. Some also fret that they’ll be cut off if the firm goes bust. And there's the perception that switching supplier will be an enormous palaver.

However, these fears are wide of the mark. “Companies must generally be licensed by Ofgem to supply gas and electricity and small suppliers have to comply with the rules that Ofgem lays down to protect consumers in the same way as the largest suppliers,” states the Department of Energy and Climate Change. “In the unlikely event that a small supplier goes out of business, there is no question of customers being cut off . There are arrangements in place to allow Ofgem to appoint another company to supply these customers.”

Jeremy Cryer, energy expert at Gocompare.com, reckons that consumers would do well to leave their fears at the door. He said: “There really is no need to be worried about switching away from the big energy companies. Smaller, independent providers can offer competitive deals and often far better customer service than their big six counterparts, so it’s well worth looking into what they have to offer.”

Of course, it might help if consumers were actually aware of the existence of smaller energy companies in the first place - they don’t have the massive marketing budgets to run big TV or sponsorship campaigns like the big boys, often relying on word of mouth, personal recommendations and customer initiative to get business.

“The market is dominated by the big six, but if consumers shop around online the smaller energy firms’ deals will show up,” said a spokesman for Which? “While the bigger suppliers can sometimes offer cheaper prices, depending on where you live and your usage a smaller supplier may be able to provide a better deal.”

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