Could you cut your bills with a smaller energy supplier?

Published by Rachel Lacey on 12 February 2013.
Last updated on 14 July 2014


From Eddie the Eagle Edwards to Susan Boyle, we Brits love an underdog, except that is, when it comes to picking our gas and electricity suppliers.

Whether it's incessant price hikes, doorstep selling, over-charging or nuisance calls - not to mention complex tariffs - the Big Six suppliers have had enough bad press in recent years.

Despite all that, some 98.5% of us still give our business to the same six companies: British Gas, EDF, E.on, nPower, Scottish Power and SSE.

This has led to a real sense of disengagement and, according to figures from the Department of Energy and Climate Change, the number of people switching suppliers has been steadily dropping since its peak in 2008. "People are fed up," says Nigel Mason, business development manager at Co-operative Energy.


But there is an alternative. Alongside the Big Six are a handful of smaller providers. "The problem is people don't know they're out there," says Ann Robinson, director of consumer policy at comparison site "So few people use comparison sites, but some of the smaller energy companies are becoming very competitive."

Given that these companies have to buy their supplies from the Big Six, which also generate much of the UK's power, it's hard to fathom how they compete.

However, at the time of writing, Uswitch's best-buy table included deals by the small but ambitious First Utility as well as fellow minnows Ovo Energy, Spark and Co-operative Energy. And unlike the Big Six, which have all announced winter price hikes, Co-operative Energy has even managed to reduce its prices and cut the cost of electricity by 2%.

"We're making a virtue of being small," says Mason. "We can move more quickly, so when wholesale prices fell back in October and November 2012 we could cut ours, which the behemoths just couldn't manage. It takes months to plan price changes."

While price is undoubtedly important, being the cheapest provider isn't the priority for many of these small suppliers, many of which are choosing to differentiate themselves on other grounds.

For Co-operative Energy, it's all about simplicity. "Our aim is to be consistently competitive rather than erratic with time-limited offers," explains Mason. So ahead of new rules that will force suppliers to reduce their number of deals from 2014, the company only offers one tariff. "The end product is identical, so it seems daft to offer so many tariffs. The public don't want to be confused," he adds.

In terms of price, First Utility is taking the Big Six head on but it's also pioneering the use of smart meters and providing customers with actual - not estimated - bills.

Other providers are targeting niche markets such as good energy, which sources all its electricity from renewable sources. Ecotricity is another environmental champion and invests all its profits into finding new sources of green energy.

Spark Energy, meanwhile, specialises in providing energy for rental properties and Ebico targets low-income households - it has no standing charges and all customers pay the same irrespective of whether they use a prepayment meter or pay by direct debit.

First Utility does appear to have struggled with huge levels of demand in recent months and customer service has suffered - a fact acknowledged by chief executive Ian McCaig in a recent email apologising to customers.

However, on the whole, smaller providers do seem to be winning the hearts of their customers and in the Which? Customer Satisfaction Survey, the top five spots were all occupied by small companies: Good Energy came out on top, followed by Utility Warehouse, Ecotricity, Ovo Energy and Ebico.

The highest scoring of the Big Six was SSE, which came in eighth out of 16.

But there is still a misperception about the reliability of smaller providers. These fears aren't entirely unfounded. In 2008, two smaller energy suppliers, Bizz Energy and Electricity4Business, went bust.

Matt Osborne, a risk manager at energy consultancy Inenco, doesn't think any more independents are likely to fold. "The ones that have survived are reasonably robust," he says. However, even if your supplier does go bust, the regulator Ofgem rules mean you would never be left without power.

"The administrators can't just come in and turn out the lights," he adds. "There are mechanisms in place to prevent this."


Whether you want better customer service, more transparency or consistently competitive pricing there is much to say in favour of switching to a smaller player, but it's important to note they don't have the same obligations as the Big Six. This is because Ofgem wants to make it easier for new players to enter the market.

For example, smaller companies don't have to offer the full range of payment options - such as cash, cheque or prepayment meters. You'll more than likely have to pay by monthly direct debit. Likewise, they don't have to take part in the Warm Home Discount (which provides certain elderly customers with a £130 towards their bills) or offer grants to improve households' energy efficiency - for example, insulation.

But if you won't benefit from any of these services this could just be another reason to switch. As Robinson points out: "About £50 a year on every Big Six bill goes towards running these schemes." So, if you're fed up with your fat cat supplier it might just be worth investigating the alternatives and backing an underdog.

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