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Are challenger energy brands taking over?

Bulb, Octopus Energy, Ovo Energy and Shell Energy are growing fast as hundreds of thousands switch

The same six firms have dominated the energy market for years but now that looks set to end. Switching to a fast-growing firm could save you £100s per year, but beware of small suppliers with shocking customer service.

Ovo Energy is set to become the second-largest energy company in Britain, if its deal to acquire larger rival SSE goes through. It would have around five million customers and only be smaller than British Gas (seven million customers).

Meanwhile, Shell Energy is in the process of buying Green Star Energy, which would take it close to one million customers.

Bulb and Octopus Energy already sell gas and electricity to over a million households each. Octopus Energy recently started supplying gas and electricity to Co-operative Energy’s customers (including Flow Energy and GB Energy).

We explore why this shift has happened and whether it’s a good thing for energy consumers.

Use Which? Switch to compare gas and electricity prices and find the best for you. Plus check the best and worst energy companies to help you make the right choice.

Is this the end of the Big Six gas and electricity companies?

British Gas, EDF Energy, Eon, Npower, Scottish Power and SSE have always dominated the household energy market. Fifteen years ago they supplied every British home.

But over the past few years they have been losing customers fast. More than 1.3 million homes have switched away from them since June 2018. Eon alone lost around 400,000 customers.

But 70% of homes are still supplied by one of them at the moment. British Gas will remain the biggest energy firm even after all of the current deals are completed.

The profits of the Big Six have fallen in recent years, according to Ofgem, and both Eon and Npower made a loss on domestic supply in 2018.

Before SSE’s current deal with Ovo Energy, it planned to merge with Npower. But this was abandoned in December 2018 owing to ‘challenging market conditions’ including the price cap and both firms’ performance.

Npower is now majority owned by Eon, which bought its parent company Innogy in September. Npower customers won’t see any immediate changes though.

Why do customers like challenger energy brands?

Many new energy firms compete to offer the cheapest deals. Others specialise in areas such as supplying prepayment customers (such as Boost and Utilita), or by focusing on digital services or smart home tech (companies including Octopus Energy and Ovo Energy have launched vehicle-to-grid car chargers).

Our research also found that customers of ‘medium-sized’ energy firms (with more than 250,000 customers at the time of research) are the most positive about them, while the biggest six firms were ranked in the lowest third of companies included.*

Some 82% of customers of medium-sized firms were happy with their energy supplier, compared with 69% of Big Six customers.

Satisfied customers

Complaints about small energy firms

Switching away from the Big Six won’t always guarantee quality. While customers of small brands were almost as satisfied (80%) as those with medium-sized firms, fewer thought their complaints handling was excellent or good.

Plus the averages hide huge disparities. Worst in our survey was small supplier Solarplicity. It scored just one star for customer service and complaints handling. Some 58% of its customers had a problem in the preceding two years, more than twice the average. Solarplicity has since stopped trading.

Solarplicity isn’t the only small energy firm to have received a lot of complaints. Recently the Ombudsman revealed that it received around four times more complaints from customers with small energy firms (per 100,000 customers) in April to June 2019 than medium-sized firms.

Can I save money on gas and electricity and get good service?

It depends on your current supplier and tariff whether or how much money you could save. Compared with a tariff at the level of the price cap (all out-of-contract tariffs with the Big Six currently cost within £2 per year of this), you could save £315 per year by switching to the cheapest deal on the market. That is based on a household using a medium amount of gas and electricity.

The top reason for switching is to get a lower price, according to our survey. But you should also take into account the quality of the energy firm’s service before you switch so can judge whether you’re likely to be saving money but getting poor customer support.

Below we’ve listed the cheapest deal from the five firms which scored highest in our most recent energy companies satisfaction survey. We’ve also noted how much you would save compared with a tariff set at the level of the current price cap so you can weigh up your options.

Cheapest tariffs from the highest-ranked energy firms

Which? energy pricing research

Prices are based on dual-fuel tariffs available in England, Scotland and Wales paying by monthly direct debit, with paperless bills.

Energy use is based on Ofgem’s annual average figures for a medium user (12,000kWh gas and 3,100kWh electricity per year). Data is from Energylinx. Prices given are averages across all regions in which they are available, rounded to the nearest whole pound and correct on 18 October 2019.

*Online survey of 7,500 energy customers among the general public in September 2018.

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