After seeing as many as two million of their customers switch to smaller companies, Britain’s ‘Big Six’ gas and electricity suppliers have finally cut their prices by launching some of the best deals on the market.
New, lower prices
Following the launch of a new, cheap gas and electricity tariff from SSE, the top firms now hold five of the top 10 places in the uSwitch.com best buy table. Sainsbury’s Energy, an imprint of British Gas, is the sixth cheapest fixed-rate deal on the market, at £1,099 until October 2015.
SSE has cut its cheapest tariff from £1115 to £1029 and occupies seventh place, while EDF, npower and Scottish Power take positions eight, nine and ten respectively.
‘Small suppliers have been leading the charge with the cheapest deals, so it’s great news for consumers that the big six are fighting back with better tariffs. These include ‘SSE Direct’, npower’s ‘Intelligent Control’ plan – which comes with a free intelligent Nest thermostat – and the longest term fixed plan on the market from EDF.’ says Tom Lyon, energy expert at uSwitch.com.
‘Suppliers need to prove themselves both on price and service if they want to win customers so no company – big or small – can afford to rest on its laurels. Consumers are voting with their feet and are easily attracted by cheaper prices and the promise that their bills will be protected from future price rises.’
Competition in the market
The shake-up comes at the same time as an enquiry into the big six suppliers by the Competition and Markets Authority (CMA) after regulator Ofgem said the market did not allow fair competition. The enquiry, which is to examine the possibility of breaking up the big suppliers, is due at the end of next year.
The so-called Big Six – British Gas, npower, SSE, Scottish Power, EON and EDF – have seen their market share fall dramatically in recent months. The large suppliers now have a 92.4% share of the energy market – a decrease from 99.8% five years ago. At the same time, independent suppliers have increased their share from 0.2% to 7.6%, according to figures from research group Cornwall Energy.
Energy UK further reports that increased dissatisfaction with billing issues, customer service and price hikes has seen as many as 225,000 customers switch supplier every month. The figures indicate consumers are now more willing to switch and are more aware of the benefits of switching.
Independent challengers
Challenger suppliers like First Utility have attracted widespread media attention in recent months. The largest independent gas and electricity supplier, First Utility last month announced it had become the first independent supplier to supply 1m customer accounts – the equivalent of 550,000 customers.
Despite some reported First Utility customer service issues at the beginning of their journey, the company consistently offers some of the cheapest gas and electricity prices on the market to see a ten-fold increase in its customer base in less than 3 years. Hot on its heels, Utility Warehouse is the second largest independent with some 450,000 customers.
Comparing energy bills
Smaller energy companies growing in mass and larger suppliers dropping their prices indicates that competition is being freed up in the sector. It’s now more important than ever to regularly compare gas and electricity tariffs and check you’re getting the best deal for your energy use.
This is particularly important if your fixed-term tariff has recently come to an end, because many suppliers will automatically put you on a more expensive roll-over tariff. Use a reputable price comparison site to weigh-up your options, then check deals directly with suppliers to see if they offer any tariffs not listed on comparison sites.
Jordan Ashe works in the energy sector. He regularly contributes insights to relevant blogs to help people better understand the UK’s position in the global energy market.