Energy prices have long been a bit of a political hot potato, but recently politicians and the media have focussed their attentions on the UK’s big six energy providers and their role in the energy market.
But why are they being criticised so much, which companies actually make up the big six and do smaller suppliers offer a valid alternative? Find the answers to these questions and plenty more in uSwitch’s guide to the big six.
Who are the big six energy providers?
They currently supply close to 95% of British households with gas and electricity. However, there are a huge number of smaller suppliers gaining a great and greater foothold in the UK. When you run a comparison with uSwitch we will show you pans from all suppliers, including the smaller ones.
Why do people criticize the big six energy firms and the UK energy market?
Because the big six supply the vast majority of UK households, questions have been raised about the competitiveness of the energy market.
Claims of price fixing usually intensify when all six energy suppliers raise their gas and electricity prices around the same time. The most recent example was during the 2013 – 2014 winter price rises, when five of the six energy firms announced price rises within weeks of each other.
In fact, Dale Vince of Ecotricity, an independent energy supplier, recently accused his larger rivals of acting 'like a cartel'.
It is, however, worth noting that recent reviews of the energy market have found no evidence of price fixing or any wrong doing. Most recently, in November 2013, Ofgem and the Financial Conduct Authority cleared energy companies of any wrongdoing in relation to claims of price rigging.
The energy watchdog stated: “It has been concluded that no evidence of the alleged market manipulation could be found and therefore that the interests of consumers have not been harmed.”
What are the dangers of an energy market dominated by six suppliers?
The main issue with just six firms providing the vast majority of the UK with energy is the potential for this dominance to result in uncompetitive tariffs and high energy bills.
What's more, because of the way the energy companies are structured, they buy and trade the energy between each other.
The UK’s economy is built on the principal of markets being competitive. That means that the more companies exist in a certain sector, the more competition there will be. This competition then forces firms to offer customers the best possible deals.
The easiest way to make sure the UK’s energy market is competitive is to encourage everyone to frequently switch energy supplier. Unfortunately, at the moment only four in 10 households have switched supplier.
This is a real pity as the more people switch to a cheaper deal, the harder energy providers will have to work to win over customers. After all, if there's no danger of losing your customers, why would you try to remain competitive?
So why don’t more people switch energy providers?
Despite repeated calls from politicians for people to switch to a better deal, uSwitch research shows that only four in 10 households have changed energy supplier.
The same research showed that there are many misconceptions about how hard it is to switch energy suppliers. For example, some respondents believed their cables and pipes would have to be replaced or that they couldn’t change as they rented their accommodation.
The truth is that many consumers aren’t aware just how easy it is to switch to a better gas and electricity deal. When you switch you still stay on the same energy, through the same pipes and with the same strength. The only difference is the how the energy is charged.
Read the Transcript
Is Switching a State of Mind? Why Only 40% of Us Switch Household Bill Providers
The majority of us are probably missing out on savings of thousands of pounds, and this is because we’re not switching enough and getting the best deals. Consumers are generally aware that they can switch, but only 42% actually do so.
On energy, would you believe, 95% of us know we can switch but just over a third have done so. Similar story on bank accounts where awareness is around 94%, but less than 50% of us have actually switched our bank account.
And it’s so easy to switch: 85% of people who switch their energy supplier found it very easy indeed. On mortgages, guess what? Most people thought this would be really difficult but in fact three quarters of people who have changed their mortgage again found it easy.
To sum up, it really is easy to switch and get a good deal. And you know what? It’s going to get even easier. For instance, there’s going to be a new bank account switching service, and in telecoms and energy there are similar changes taking place, so it’s going to become a doddle.
I do feel passionate about getting these messages to everybody, and I’m really keen that there should be a high profile education campaign because I think it’s really important that we help people develop confidence so they feel ok about shopping around and switching.
With so many of us seriously struggling to pay for the basic necessities, it really is important that people feel able to shop around and get a very good deal. In my opinion, it might make all the difference between simply just about surviving and maybe building a bit of quality back into our lives.
So, are there alternatives to the big six energy companies?
Yes, plenty! Small or independent energy suppliers represent a valid alternative to the big six.
Small suppliers often offer deals on par with, or in some cases cheaper than, the big six. However, many Brits remain unsure about making the switch, even if they could end up making a saving. In fact, a uSwitch survey carried out in April 2013, revealed that 44% of those signed up with one of the big six would not consider moving to a smaller supplier.
The main reason customers are afraid to move to a small supplier is that they fear that independent gas and electricity providers are more likely to go out of business. Other concerns include customer service not matching up to that of the big six suppliers, or simply a lack of willingness to trust a brand they have never heard of.
How do I switch energy supplier?
Switching energy supplier is easy. Simply put your postcode in the green box and answer the questions to find out how much you can save.
For the most accurate results it’s best to arm yourself with a recent energy bill, but we can also estimate your bills based on your location and how many people you live with.
The process only takes a few minutes and is easy and painless. So what are you waiting for? Grab a recent energy bill, fill in our form and you could be on your way to saving hundreds of pounds, it really is that easy.