Should you switch to a smaller energy supplier? New government regulations mean a switch could save you money.
If you are part of the 95% which buys energy from the big six - British Gas, EDF, E.ON, npower, ScottishPower, and SSE – now may be a good time to save money by switching to a smaller provider.
Why? Well quite simply because small suppliers are currently offering the cheapest energy deals on the market. In fact, First Utility is currently offering the cheapest energy deals the market has seen for the past two years! Simply run a quick energy comparison to find out how much a switch could save you.
The big six supply the vast majority of the UK with energy. This dominance could result in uncompetitive prices and means many customers are unaware of the benefits of switching to a small energy supplier. This is a real pity as these smaller providers represent a genuine alternative and can offer you significant savings.
It is worth noting that independent suppliers with fewer than 250,000 customers, which is currently most of them, are not required to offer the Warm Home Discount scheme. The scheme allows certain people to claim a £135 discount on their energy bill over winter and is available through the largest independent supplier; First Utility.
How can smaller suppliers offer cheaper deals?
You might be wondering how smaller suppliers are able to compete with the big six. A few factors have made this possible.
In an attempt to increase competitiveness, the government has removed a number of obligations on small suppliers to help them get a foothold in the market. For example, suppliers with less than 250,000 customers are no longer required to take part in government schemes such as the Energy Company Obligation (ECO), which is funded by large energy suppliers.
As a result of these changes small energy suppliers are no longer held back by issues such as relatively limited access to funding. Smaller gas and electricity providers can use these savings to offer you similar or even better prices than their larger competitors.
The move is part of a wider plan of Ofgem’s to add transparency to the energy market and create a level playing field for energy suppliers. Additional measures include a requirement for the big six to publish the prices they buy and sell wholesale electricity at, two years in advance. Ofgem will then ensure that the suppliers are actually trading at these prices and will fine companies which are not.
These measures should help create a fairer market for both large and small suppliers.
How can I find out which small supplier is best for me?
An easy way to find out if a switch to a smaller energy provider will save you money is by running an energy price comparison. We have put together a quick and accurate process for comparing, selecting and switching suppliers.
All you need to do is provide us with a few details such as your postcode and information regarding your current energy use. Simply enter your postcode into the green box to get started.
Will switching mean a period with no energy supply?
Not at all. When you switch to a small gas or electric provider you won’t find yourself without power during the changeover. Your new and old suppliers will communicate with each other and there will be no physical installation process. The only change you will notice is the name of the company and the figures on your bill.
Where can I find out more about a particular small energy supplier?
Our guide to energy supplierscontains an array of information about all the small energy providers currently available on the market. Here you will find out about each energy company’s background, what makes them different and, in some cases, what their customers think of them.
What if the supplier can’t provide me with energy anymore?
If you’re worried that a small supplier may go “belly up” on you, you’re not alone. A survey carried out by uSwitch in April 2013 revealed that 44% of those contracted to a big six energy supplier would not consider switching to a smaller supplier. Fear and a lack of trust were the main reasons given.
However, you can rest assured there are rules to protect your household against any energy supplier going bankrupt. Energy regulator Ofgem has enforced a number of regulations and, should there be a problem, you will be switched to a new supplier.
What other factors should I take into consideration?
When comparing energy suppliers you should not just consider price. Different people have different priorities, and your ideal supplier may not necessarily be the least expensive.
Small suppliers may have cheaper deals than their larger competitors but may not offer perks including vouchers, gifts or points. Other elements you might want to take into account are whether or not energy plans use a certain amount of renewable or “green” energy.
Again, our energy provider comparison table has all the information you need to make a decision about switching suppliers.
Are uSwitch's energy comparisons impartial?
Yes. uSwitch offers an unbiased and accurate energy comparison service to ensure you select the best deal for your home. When you compare prices through uSwitch, results are generated purely in response to the information you input.
We are also signed up to Ofgem’s Confidence Code, which requires us to guarantee impartiality, independence, accuracy and a fair, overall view of the market. In addition, as suppliers value the customers they gain through uSwitch, we often have access to exclusive deals which can help you save more money.