In the UK, the energy landscape is dominated by six major energy suppliers, British Gas, EDF, E.On, Npower, Scottish Power and SSE.
It is estimated that the Big Six supply 92.4% of the British population at the moment with their electricity and gas – the thing is that these 6 companies not only tend to be rated the worst when it comes to customer service, they also tend to be the most expensive!
Why are the big six energy companies more expensive?
There are a few reasons why the bigger energy companies are more expensive, firstly their overheads are far higher than most of the other smaller upstarts – this additional cost is sadly passed on the consumer.
In addition, any energy company with over 250,000 customers is obliged to pay the Green Levy, funding households for free insulation / boilers and other energy efficiency products. You may remember at the end of last year that the Energy companies tried to fight this obligation and the Government backed down and reduced their required financial input.
The final reason is brand recognition – the Big Six feel like they can charge more – take for example British Gas who charge way more than other heating companies to install a new boiler. Many people ‘trust’ them and some are willing to spend way more for peace of mind. These companies can leverage their reputation and charge more that their smaller competitors, despite the fact that the electricity you buy for example, still comes from the closest power plant!
People’s perception of the Big Six is changing!
We go into 1000s of people’s homes every month and over the last couple of years we have genuinely noticed a change in people’s perception of the bigger energy companies.
It may simply be the bad press that they get (we are not sure the last time we read a complimentary piece from the media about them), but smaller energy companies consistently come top of the energy price leagues. The smaller companies pass on the savings resulting from wholesale prices going down, while the bigger energy companies feel in a position that they don’t need to. This is despite the fact that these smaller companies need to buy their supplies from the big six!
Over the last 5 years the smaller energy suppliers have increased their market share from 0.2% to 7.6% – with 3.8m customers now getting their gas from the smaller companies. This should be a real cause for concern for the big six – these numbers should force them to bring their prices down to match and potentially even beat the smaller competition.
For you though the changes can only be good – with more competition in the market, prices will be more competitive for both gas and electricity, although the overall trend for gas and electricity will still be tied to global fuel prices in the long term. Also, the sheer number of people now using the smaller companies should give you the confidence to trust in them too – it is worth mentioning again that electricity is the same whoever provides it, so apart from price and customer service nothing should tie you to a particular supplier.
What should you do to change energy supplier?
Click ‘compare now’ on the banner below – this will take you to uSwitch.
Once there you can quickly get a view of how much you could save on your energy bills by swapping supplier.
We are not trying to cause a mass exodus from the ‘Big Six’, what we want to do is get them to compete – at the moment they charge whatever they want because they can. As people realise they can swap energy supplier with a minimum of fuss (the comparison websites do everything for you), the 92.4% will hopefully fall much further, so then the energy suppliers really are sparring on equal footing.
Think we missed something? Do you have a different opinion?
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