Big six energy suppliers to lose 2.4m customers

At least 2.35m customers will switch away from the traditional 'big six' suppliers by the end of 2018, according to figures released by trade body Energy UK, opting to take up supply with many of the smaller, often cheaper, energy companies.

Across the market, small energy suppliers are rapidly gaining ground from behemoths like British Gas, SSE, npower and EDF. Green supplier Bulb now boasts around 700,000 customers, and newcomers Octopus Energy are now approaching almost half a million, having received a welcome boost by taking on customers from failed supplier Iresa.

As far back as 2015, an investigation by the Competition and Markets Authority (CMA) discovered that almost every customer on a dual fuel contract with a big six provider could save money by switching. Their figures revealed that 95% of households would be between £158 and £243 better off each year if they moved to a different company.

Despite these findings, many customers have previously opted to stay with the well known and trusted brands. But it seems that recent price hikes across the larger suppliers have spurred more households on to seek out better deals in a bid to keep their bills manageable.

Never been a better time to shop around

On average, energy bills with a big six supplier will cost £76 more each year than they would have in 2017. As well as raising the price of tariffs, we've seen many of the 'perks' offered falling by the wayside too. Dual fuel discounts, paperless billing discounts and direct debit offers are all notably absent from many of the offers available today.

Chief Executive for Energy UK, Lawrence Slade, believes that the prevalence of switching activities can only be a good thing. He expressed a pleasant surprise that people were still thinking about getting a better deal, even during the recent UK heatwave. He said,

"It has never been a better time to shop around or call your existing supplier to see if you could be on a better deal for you - whether that's a cheaper deal or a green tariff or better customer service. Switching can take as little as 10 minutes and customers should feel confident it will be simple, speedy and safe."

There are currently around 80 suppliers in the British energy market, which includes a number of very small companies who can offer significantly cheaper deals. This is because they are able to make savings on operational costs, such as staffing, office space and green taxes. These savings are passed on to the consumer, often beating bigger suppliers by several hundred pounds a year.

What's making the price of energy go up?

It seems rising prices are common across the industry right now, which may be contributing to the acceleration of switching suppliers. So far in 2018, we've seen price hikes from most of the big six suppliers, with British Gas hiking prices twice. E. On and EDF have also raised prices for their standard variable tariffs.

And it's not just the big suppliers either. First Utility, Tonik Energy, iSupplyEnergy, Outfox the Market and others have also hiked prices over the course of the year. Notably, green energy supplier Bulb, with around 700,000 customers, has indicated it could need to raise prices in November. If this goes ahead, it will be the third hike this year, following a 2.8% rise in February and a 5.1% hike in June. As they offer only one tariff, every customer is affected by their price changes.

Ofgem have raised the price cap for their safeguard energy tariff by £47, echoing the concern in the industry that inflated wholesale prices need to be mitigated by suppliers. Oil prices hit a three-year peak in May this year, as the dust began to settle following the US decision to pull out of the Iran nuclear accord. European prices also felt the strain, driven by issues with the North Sea gas assets at Kvitebjorn.

Source: https://www.utilityhelpline.co.uk/market-reports/wholesale-price-july

Although a slight dip has been experienced more recently, as Trump along with Russia and Saudi Arabia entered dialogue to try and talk them back down. However, concerns in the market remain high due to re-instated sanctions on Iran and production in Venezuela crashing rapidly. Closer to home, further outages in North Sea production facilities has kept us from seeing the usual dip in summer gas prices.