The ‘big six’ is a term often used to describe the six largest energy companies operating in the UK. Traditionally, they are made up of British Gas, EDF Energy, E.ON, npower, ScottishPower and SSE. At the height of their influence, these companies supplied seven out of 10 British households with gas and electricity.
However, there are a huge number of smaller suppliers gaining a greater foothold in the UK, and they are not only having an influence on the number of customers the big six supply, but they are also redefining what the big six are.
In December 2019, SSE announced that it had reached an agreement with OVO for the latter company to acquire its customer portfolio.
Additionally, in 2021, npower agreed a deal to move its customer base to E.ON, which shifted all of its customers to a new sub-brand called E.ON Next. This left British Gas, EDF Energy, E.ON Next, OVO and ScottishPower as five of the biggest suppliers in the country.
Meanwhile, First Utility, one of the more prominent challenger energy brands, was acquired by Shell and renamed Shell Energy. With the weight of one of the world's most recognisable and powerful companies behind it, Shell Energy had emerged as a legitimate competitor to the current dominant suppliers. However, in the summer of 2023, Shell announced it would be selling its domestic energy business in the UK and exiting the market. It's expected this process could take until 2024 to be completed.
That's without mentioning the rise in popularity of companies like Octopus which, while not rising to the customer numbers of OVO, are steadily growing as customers take advantage of attractive introductory offers and reasonably-priced tariffs.
This means that, since the early 2000s, the energy market has undergone significant change in terms of which suppliers have dominated market share. The chart below demonstrates this (in terms of electricity suppliers) - look out for OVO taking over SSE's customer base towards the end of the timeline.
Since then, though, the energy market crisis which has dominated news cycles since September 2021 has seen a huge amount of smaller energy suppliers, which were under-equipped to deal with the challenges of increases in the cost of wholesale energy, go bust. The biggest of these was Bulb, which had 1.3 million customers.
In 2023, you could therefore identify a "big seven" based on market share:
But with Shell's imminent departure, we will be back down to a big six, with Octopus and OVO replacing npower and SSE.
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. As we've seen, the rise in smaller suppliers has created more competition in the market, but at the potential cost of chaos we saw during the energy market crisis when more than 25 smaller suppliers went out of business.
Before the current energy market crisis, which has almost completely halted customers' ability to switch, there were many misconceptions about how hard it is to switch energy suppliers. For example, some people still believe their cables and pipes have to be replaced or that, if they rent, they're not allowed to change.
However, in a functioning energy market, switching couldn't be easier or more accessible - when you switch you still stay on the same energy, through the same pipes and with the same strength. The only difference is how the energy is charged.
Small or independent energy suppliers represent a valid alternative to the bigger names. Small suppliers often offer deals on par with, or in some cases cheaper than, the big six, and can provide a more comprehensive level of customer service. However, many people remain unsure about making the switch, even if they could end up making a saving.
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. This isn't an unfounded fear, as there is very little to prevent anyone setting up an energy supply business, and many smaller companies have gone out of business over the past couple of years alone. 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.
Switching energy supplier would normally be easy - usually all you'd need is your postcode and plan name. The process only takes a few minutes, though be aware that there is unlikely to be huge amount of deals (if any) to switch to.
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