First, the basics: the term "small suppliers" — sometimes referred to as "independent suppliers" — is generally used to describe any energy supplier that is not one of the traditional big six.
These small suppliers generally have 250,000 customers or fewer, though some larger independent suppliers, like OVO Energy and Shell Energy (formerly known as First Utility), are more established and have several thousand more.
In 2006, there were only 10 energy suppliers to choose from, including the so-called big six (British Gas, ScottishPower, EDF Energy, E.ON, npower and SSE). Many of the challenger energy suppliers entered the market after 2013, when energy regulator Ofgem unveiled its plans to create a more level playing field for small suppliers in an effort to shake up the market and pave the way for more competition.
Small energy suppliers have been serious contenders to the big six, offering some of the cheapest energy deals on the market - and many score highly in customer service ratings too.
However, since the beginning of the energy market crisis, there has been an increase in small suppliers going out of business, with those that remain growing by virtue of taking on the customers of those suppliers that have gone bust. As a result, there are very few "small" suppliers left.
Small suppliers are able to offer cheap energy deals because they have smaller overheads than more established suppliers. They are also not held to the same costly obligations that large suppliers are, such as paying into government schemes like ECO.
You might also find that small suppliers are able to be more innovative without the red tape that can hold larger suppliers back. Many small energy suppliers are leading the way in green energy and technology that makes it easier to manage your accounts.
While many new suppliers have entered the market in recent years, some have failed to last the distance. A small energy supplier might struggle to survive financial difficulties in comparison to a more established supplier. This is more likely to be the case over the next few months as the well-documented high wholesale prices situation forces smaller suppliers who have less cash to cover themselves with out of the market.
While historically many small suppliers have operated without issues, as noted above, a higher percentage are likely to exit the market in the near future.
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. This will have no impact on your energy supply. You can find out more in our guide to energy suppliers going bust.
Many smaller suppliers have been ranked more highly for customer service than their big six competitors.
In a 2022 independent Uswitch survey of more than 16,000 UK energy consumers, households rated their suppliers in categories including Best Customer Service and Most Likely To Recommend. The top three suppliers for those two categories were all "small" energy suppliers.
If you run an energy comparison through Uswitch, information about the supplier is provided in your results on the Plan Info page.
This information includes when the suppliers were established, any warnings such as advance payment requirements and, where available, an independent customer satisfaction score.
We also provide guides to energy suppliers, which contain information about most energy providers currently operating.
You can also use trusted user review sites like TrustPilot to read real experiences and feedback from customers of any given supplier.
In years gone by, the short answer would have been that gas and electricity is all the same whichever supplier you choose. What you're really paying for is the supplier — their customer service, their account management and any rewards and extras they offer — so it's important to know a bit about them before taking the plunge. However, this now includes some risk assessment about whether they're likely to go bust. As previously mentioned, there are also very few suppliers that really meet the tag of being small, so there may be few options anyway.
If you can find one, though, a small supplier can offer some great deals and better customer service than bigger names — just be sure to look past just the low price before signing up.
Looking for a cheaper gas or electricity supplier but not sure where to start? Check out our step-by-step guide on how to find a better energy supplier.Learn more