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 now more than 70 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 six energy companies? If so, you’re far from alone. Around three quarters 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 six biggest that come out on top.
If you’re a Big Six customer and on a 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 £169 or more per year, 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
Bulb, First Utility, Ovo Energy, Utilita and Utility Warehouse are the next largest companies, beyond the Big Six firms. Four of them have been trading for at least five years, while Bulb entered the market in 2016 and has grown fast since then. They aren’t really small energy suppliers: all have around half a million customers or more. Co-operative Energy and Green Star Energy are the next biggest, each with more than 250,000 customers. Economy Energy also fitted this bracket, before it went bust in January 2019. We call these ‘medium suppliers’.
Smaller energy suppliers include Ebico, Ecotricity, Flow Energy, Good Energy, Octopus Energy and So Energy.
To find out if you should pick a smaller supplier or stay safe with the Big Six, we analysed our survey data. Last year we found that medium-sized ‘challenger brands’ customers were most satisfied overall so, as more suppliers have grown, we wanted to check if it was still true.
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 almost every measure we surveyed on. That’s compared with Big Six and smaller suppliers.
Medium suppliers seem to be super-serving their customers. There’s an 11 percentage point gap between the proportion of their customers (82%) and customers of Big Six companies (69%) who are satisfied or very satisfied.
Almost as high a proportion of smaller suppliers’ customers were satisfied as medium firms.
Medium-sized suppliers particularly stand out for their complaints handling and helping customers understand and reduce their energy use.
Smaller firms are hot on their heels however. Their customers ranked billing clarity good or excellent as often as medium-sized suppliers’ customers, and value for money marginally more often.
Big Six customers are the least impressed on every single aspect.
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 has happened to several GB firms in the past year, including Economy Energy, Spark Energy, Extra Energy, and Iresa.
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 customers’ tariff prices, but your credit balance is protected. When Spark Energy collapsed, Ovo Energy took on its customers, and continued to run the Spark brand. Economy Energy's customers were also taken on by Ovo and its prepayment brand Boost. 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 30 energy firms, including many small ones. But some firms are too small for us to provide ratings for, even when we ask more than 7,000 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 another newcomer was 2019’s lowest-rated firm. 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. But picking a smaller firm is no guarantee of quality: the two lowest-scoring firms are medium or small 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.