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Small Energy Suppliers Beginning To Drive Competition At Last

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According to research from Cornwall Energy, small gas and electricity suppliers now boast a customer base of 3.8m households as the market share of the ‘big six’ energy suppliers continues to fall. Currently, each of the top five cheapest plans on the market are all offered by small suppliers.

The news comes at the same time as First Utility, Britain’s biggest independent gas and electricity supplier, announced hitting 1m accounts. Other popular small suppliers include Utility Warehouse (835,000 accounts) and Ovo Energy (640,000 accounts).

Ann Robinson, Director of Consumer Policy at uSwitch, said: “This is a significant milestone for First Utility and evidence that small suppliers are at last beginning to drive competition and make the energy market work for consumers.

“Many of us can save over £200 by switching to a small supplier, which can make a huge difference to cash-strapped households.

“The growing popularity of companies like First Utility shows that small suppliers are here to stay, thanks to the excellent deals they are offering. If the big six energy providers are to keep hold of their customers, they’ll have to look at introducing more competitive prices and improving their customer service.”

The switching trend rides off the back of an investigation into the big six by the Competition and Markets Authority (CMA) after energy regulator Ofgem claimed there is no possibility of fair competition in the market. The probe will last until the end of next year and will look at the possibility of splitting up the top suppliers. The government will also work on proposals to improve engagement with independent suppliers.

According to the Daily Mail, increased customer dissatisfaction with the big six has come from repeated price hikes, billing issues, poor customer service and difficulties experienced when claiming refunds. Last year’s winter price rises saw the top suppliers raise gas and electricity bills by nearly 10% and Ofgem claims staying loyal to the same supplier costs customers up to £232 per year. In contrast, those who have switched to a small supplier will save £180 per year on average.

The number of gas and electricity suppliers in the UK has more than tripled since 2010 yet small suppliers still have a long way to go if they’re to catch up with the big six suppliers – British Gas, npower, SSE, E.ON, EDF and Scottish Power. The largest supplier, British Gas, supplies 15m accounts and the big six retains 92% of the market.

Despite the dominance of the big six, more than 225,000 households are switching suppliers each month according to Energy UK and the biggest suppliers have lost 2m customers to smaller suppliers since 2010.

“More and more people are voting with their feet and switching away from the Big Six to newer providers, chasing lower prices and better service. The Big Six need to raise their game if they want to keep customers,” says USwitch chief executive Steve Weller.

Debbie Faulkner is an energy blogger who champions green energy and campaigns against the monopolisation of the ‘big six’ energy companies.

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