Should I switch to a small energy company?
Are you with one of the biggest energy companies? More than half of us buy gas and electricity from the original firms - British Gas, EDF Energy, Eon, Npower and Scottish Power - 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 these firms never top the table.
If you’re a customer of one of the traditional firms and on their out-of-contract or default tariff (also called standard variable), you’re in double trouble. These are rarely companies’ cheapest deals. Though the price cap limits the amount you can be charged, the average customer can still typically save £200 or more per year by switching to one of the cheapest deals available on the market.
But it's not just longstanding firms which are big. Some newer suppliers are now just as large as the companies they were set up to rival. Ovo Energy is the second-biggest energy firm after British Gas, after it bought SSE’s energy customers. Bulb and Octopus Energy supply over 1.5million homes each. But so far, these newer big firms are still better-loved by their customers.
Big vs small gas and electricity companies
British Gas, Bulb, Eon, EDF, Npower, Octopus Energy, Ovo Energy (which owns the SSE brand) and Scottish Power all supply more than 5% of homes each. The next-biggest firms are Shell Energy and Utilita, which both supply gas and electricity to just over 2% of homes each.
Other firms providing power to more than 1% of households include Avro Energy, Green Network Energy and Utility Warehouse. In practice this means that they have at least 250,000 customers each.
Avro Energy, Bulb, Green Network Energy and Octopus Energy all launched in the last six years and have grown fast since then.
Newer challenger firms include Outfox the Market, Powershop, Pure Planet and So Energy .
But not all small brands are new. Ecotricity, Good Energy and Green Energy UK, 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 energy customers are happiest?
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, just two thirds said the same about the lowest-ranked company.
The top-ranked firm is a small supplier, while the lowest-ranked supplies more than three million homes.
Customers of the traditional big firms generally tend to be less satisfied overall than customers with newer big firms. Around three quarters or fewer of their customers said that they were satisfied, in our survey. Whereas more than 80% of customers with Bulb, Octopus Energy and Ovo Energy said they were satisfied with their supplier.
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 table below reveals.
Customer ratings and energy supplier sizes compared
|Best result||How big is the firm?||Worst result||How big is the firm?|
|Excellent/ good billing accuracy||90%||Small||66%||Small|
|Excellent/ good billing clarity||90%||Small||65%||Large|
|Excellent/ good customer service||72%||Medium||46%||Medium|
|Excellent/ good complaints handling||65%||Small||19%||Small|
|Excellent/ good value for money||96%||Small||60%||Large|
Based on an online survey in September 2020 of 7,460 people. Large suppliers have more than 5% market share, medium have 1-5% market share and small have less than 1% market share, according to Ofgem in January 2021.
None of the biggest energy suppliers were best on any area. But it's also not as simple as picking a smaller supplier to avoid poor service. Small suppliers had the smallest proportion of customers give high ratings to their complaints handling and bill clarity.
So that's where our survey results come in - we’ve found small firms whose customers consider them excellent, and other small firms rated terribly by their customers. Use our ratings for the to check any firm you're considering in detail.
Is it risky to switch energy supplier to a small firm?
The ultimate risk of choosing a small energy supplier is that it goes bust. This has happened to several GB firms in the past year, including Green Network Energy. Tonik Energy and Yorkshire Energy. Other small firms get bought out or taken over by larger ones. For example Robin Hood Energy's customers were sold to British Gas.
Many of these were were relatively small. Robin Hood Energy and Tonik Energy had more than 100,000 customers each. Green Network Energy was bigger, with around 360,000 customers, or about 1.3% of homes in Great Britain.
It's important to note that 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. It usually takes a few days to choose the new supplier and several weeks for customers to be set-up with the new firm.
The new supplier doesn’t have to honour the price you're currently paying, but your credit balance is protected (even if you switched away). recently took on the customers of Green Network Energy and put them onto its 'deemed' tariff rate. This was a 'competitive tariff', according to energy regulator Ofgem, but wasn't identical to the one customers had previously. In the past, some suppliers have allowed customers to keep their existing tariffs.
If you were in credit to the closed supplier, it can take several weeks (sometimes longer) to get your money back. This is because the new supplier has to go through the old supplier's records and deduct any unbilled charges.
The other risk of going with a very new energy firm is that its service is untested. Our most recent energy companies satisfaction survey includes ratings for 25 energy firms, including many small ones. But some firms are too small for us to provide ratings for, even when we asked more than 7,000 energy customers for their opinions. So we can't vouch for their service.
If you get the Warm Home Discount (a £140 payment to those who qualify for certain benefits), check that the small supplier you’re considering will pay you this. Energy firms only have to pay out if they have 150,000 customers or more – but some smaller firms choose to pay even if they have fewer customers.
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 as new smaller suppliers have grown, we've seen some retain their high rankings. Octopus Energy, for example, is now arguably a large firm and sits in second place overall.
Ovo Energy has always been among the higher-ranking companies and now it’s also one of the very biggest. Its customers with the SSE brand weren't as satisfied as longer-standing Ovo customers, but we'll be keeping an eye out in future to see whether customers' opinions change.
So picking a supplier based on size is no way to determine quality.
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.