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Small energy companies

Should I switch to a small energy company?

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Should I switch to a small energy company?

There now more than 70 energy companies, including a raft of small suppliers. We explain the pros and cons of small gas and electricity companies.

Are you with one of the biggest six energy companies? If so, you’re far from alone. Around eight in ten of us are still with 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 the smaller firms that come out on top.

If you’re a Big Six customer and on a standard variable tariff, you’re in double trouble. Standard tariffs are rarely companies’ cheapest deals, and the average customer can be overpaying by £200 or more, compared with the cheapest deals on the market.

Read on to see what small suppliers can offer, the benefits and risks, and what customers think of them. Or find out if a small energy company can save you money: compare gas and electricity prices with Which? Switch.

Big Six, medium and small energy firms: what customers really think

First Utility, Ovo Energy, Utilita and Utility Warehouse are the next largest companies, beyond the Big Six firms. All have been trading for at least five years and aren’t really small energy suppliers: all have around half a million customers or more. We call these ‘medium suppliers’.

Smaller energy suppliers include Bulb Energy, Co-operative Energy, Economy Energy, Ecotricity, Flow Energy and Good Energy.

To find out if you should pick a small supplier or stay safe with the Big Six, we analysed our survey data. We also wanted to check if rapidly-growing medium-sized ‘challenger’ brands are slipping in the eyes of customers.

Which customers are the most satisfied?

Customers of medium-sized energy firms are the most satisfied, most likely to recommend their supplier, and most likely to rank their supplier excellent on every measure we surveyed on. That’s compared with Big Six and smaller suppliers.

Medium suppliers First Utility, Ovo Energy, Utilita and Utility Warehouse seem to be super-serving their customers. There’s a 20 percentage point gap between the proportion of their customers (52%) and customers of Big Six companies (32%) who are very satisfied. More than four in ten (45%) of smaller companies’ customers are very satisfied. 

Very satisfied customers:
52% medium companies
45% small companies
32% Big Six

Medium-sized suppliers also stand out for the accuracy of their bills.

Smaller firms are hot on their heels. Their customers rank value for money, billing clarity and online customer service as excellent almost as frequently.

Big Six customers are the least impressed on every aspect, with the exception of helping customers understand and reduce their energy use.

Customers of Big Six energy firms are also most likely to have had a problem in the last two years, as the graphic above shows.

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 happened to GB Energy Supply in November 2016, Northern Ireland’s open Electric, Brighter World Energy and, more recently, Iresa.

But if your supplier does go under, you 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.

If your supplier goes under, you won’t be cut off.

This supplier doesn’t have to honour the customers’ tariff prices, but your credit balance is protected. When GB Energy Supply collapsed, Co-operative Energy took on its customers, and continued to run the GB brand. When Iresa went bust, Octopus Energy said it would honour the credit balance of both past and present customers.

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 31 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. Find out who they are - see our best and worst energy companies.

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 250,000 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?

Small and medium-sized suppliers fill the top spots in our energy customer satisfaction survey, while the Big Six sit nearer the bottom. Smaller doesn’t always mean better, though: two of the three lowest-scoring firms are smaller suppliers. 

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.

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