Small energy companies
Should I switch to a small energy company?
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Should I switch to a small energy company?
There are more than 60 energy companies, including a raft of small suppliers. We explain the pros and cons of choosing small gas and electricity companies.
Are you with one of the biggest energy companies? If so, you’re far from alone. Around seven in 10 of us still buy gas and electricity from British Gas, EDF Energy, Eon, Npower, Scottish Power or SSE, despite the huge and growing choice of companies.
You could be forgiven for thinking this is because they offer something special to their loyal customers. But this isn’t the case. Each year, we ask energy customers to tell us what they really think of their suppliers – and it’s always firms besides the these six that come out on top.
If you’re a customer of one of the traditional firms and on their standard variable or default tariff, you’re in double trouble. Standard tariffs and default tariffs are rarely companies’ cheapest deals, and the average customer can be overpaying by £300 or more per year, compared with the cheapest deals on the market.
But the market is changing. Challenger brands are gaining customers at a rapid rate, and some are now almost as big as the companies they were set up to rival. Ovo Energy recently bought SSE’s energy customers, making it the second-biggest energy firm after British Gas.
Read on to see what newer and smaller suppliers can offer, the benefits and risks, and what customers think of them. Or compare gas and electricity prices with Which? Switch to see if you could save.
Energy firms big and small: what customers really think
Bulb, Octopus Energy, Shell Energy, Utilita and Utility Warehouse are the next largest companies, beyond the six big original firms and recently expanded Ovo Energy.
Three of them have been trading for at least five years, while Bulb and Octopus Energy both launched in 2016 and have grown fast since then. None of these are small energy suppliers in truth: all have at least half a million customers. Octopus Energy recently acquired Co-operative Energy, meaning it now has closer to 1.4million customers.
The next-biggest include firms such as Avro Energy, E, Green Network Energy and Green Star Energy. All have 250,000 customers or more.
Newer challenger suppliers include Powershop, Pure Planet, So Energy, Tonik Energy and more.
But not all small brands are new. Ebico, Ecotricity and Good Energy, for example, have all been selling gas and electricity for more than a decade.
To find out if you should pick a smaller supplier, a newer supplier, or stay safe with an established firm, we analysed our survey data.
Which customers are the most satisfied?
Proportion of satisfied customers
Our survey revealed a wealth of difference between firms when it comes to how satisfied their customers are. While more than nine in 10 customers of the top-ranked firm said they were satisfied, fewer than six in 10 said the same about the lowest-ranked company.
The top-ranked firm has over a million customers, while the lowest is arguably a small supplier, supplying less than half a million homes.
Customers of the traditional biggest six firms tend to be at the less satisfied end of the scale. Three quarters or fewer of their customers said that they were satisfied, in our survey.
Our survey also revealed big differences between the proportion of customers who rated each aspect of their energy company’s service as good or excellent, as the chart below reveals.
The best firms achieved over 85% on each measure, while the worst managed less than two thirds of customers saying they were good or excellent.
But on each area this year, a small energy firm typically had the smallest proportion of customers ranking it good or excellent, while a small or medium-sized firm typically also had the greatest proportion of customers advocating it. We've illustrated this in the chart below, where blue indicates firms with fewer than a million customers, red those with between one and two million customers, and green marks those with more than two million customers.
Customer ratings and supplier sizes compared
Only one measure saw a traditional big energy firm gain the lowest proportion of those rating it good or excellent – this was for value for money.
So it’s important to check the results of any energy firm you’re considering in detail - we’ve found small firms whose customers consider them excellent, and other small firms rated terribly by their customers.
Is it risky to choose a small energy firm?
The ultimate risk of choosing a small energy supplier is that it goes bust. This is what has happened to several GB firms in the past year, including Eversmart Energy, Our Power and Toto Energy.
But if your supplier does go under, your gas and electricity won’t be cut off. Energy regulator Ofgem appoints a replacement gas or electricity supplier to take on the failed supplier’s customers. There’s a competitive process to decide which supplier this will be.
This supplier doesn’t have to honour the price you're currently paying, but your credit balance is protected (even if you switched away). When Eversmart Energy and Our Power stopped trading, Utilita took on both of their customers, totalling around 50,000 homes. Toto Energy customers were moved to EDF Energy.
The other risk of going with a very new energy firm is that its service is untested. Our annual energy companies satisfaction survey includes ratings for 35 energy firms, including many small ones. But some firms are too small for us to provide ratings for, even when we ask more than 8,000 energy customers for their opinions.
That said, several companies which were only big enough to feature in our survey for the first time this year were ranked very well by their customers. But you need to check which they are – because a company we’ve only rated for the second time this year was 2020's lowest-ranked firm. See the best and worst energy companies to find out.
If you get the Warm Home Discount (a £140 payment to those who qualify for certain benefits), check that a small supplier you’re considering will pay you this. Energy firms only have to pay out if they have 200,000 customers or more – but some smaller firms choose to pay even if they have fewer customers.
Use our guide to check which energy suppliers will pay. Go to Warm Home Discount.
Should I switch to a small energy supplier?
The top spots in our energy customer satisfaction survey are filled with smaller and medium-sized suppliers year-on-year, while the traditional six firms sit near the bottom.
But we’ve seen some newer firms, such as Bulb and Octopus Energy, grow into million-customer businesses – they’re no longer small but they’re still keeping customers happy.
Ovo Energy has always been among the higher-ranking companies and now it’s also one of the biggest. Our survey was conducted before it took on SSE’s customers but we’ll be keeping an eye out for customer feedback now it has a much bigger customer base.
So picking a supplier based on size is no way to determine quality.
Use our energy survey results to make sure you pick one of the best, and avoid the ones that aren't recommended by their customers.
The cheapest deals are usually from smaller energy firms, too – and we know price is the most important consideration when you’re choosing a new energy supplier.
Use our independent energy site Which? Switch to compare gas and electricity prices and find the cheapest energy deal for you.