Smaller energy suppliers VS The Big Six
GB Energy Supply has launched a new fixed-rate deal that will save consumers hundreds of pounds in comparison to the average UK household energy bill. The average annual cost of the tariff is £735, which is £334 cheaper than the average figure listed in Ofgem’s April 2016 report. After reading this in the news, I wanted to compare companies like GB Energy Supply with those of The Big Six, who are the energy industry’s current leaders, the publicly unstoppable.
This new tariff is available to GB Energy Supply’s current customers and also to consumers that wish to switch suppliers. Early exit fees are non-existent; another advantage GBES has against some of its larger competitors. However, the tariff is expected to only be available until the 23rd June, so anyone looking to switch over will want to move swiftly.
According to Luke Watson, founder and Managing Director of GB Energy Supply, “For years I’d seen how the energy market was dominated by big players that were able to charge customers way over the odds, often with poor customer service.“ Watson has explained that he established a need to provide customers with cost effective gas and electricity solutions, which is apparently more than what can be expected from their current suppliers.
GB Energy Supply launched in 2014 and has grown at an increasingly high rate ever since by offering their customers prices that are substantially lower than the average household energy rates. The Big Six (comprised of British Gas, EDF Energy, npower, E.ON UK, Scottish Power and SSE) dominate the energy market and possess more than 85% of the market share, making it extremely hard for companies outside the six to enter into these levels of success.
GB Energy has found success at working against the challenges of The Big Six by also offering a higher level of customer service, something that the larger industry players are constantly criticized for, according to Luke. Luke believes that slowly but surely, consumers are beginning to wake up and smell the roses. Although switching providers is a seemingly difficult process, consumers are starting to find the transition less strenuous than it has been in the past and this realization is allowing more customers to save money on their energy bills.
Despite this, the Competition and Markets Authority suggested in a report that The Big Six are not gaining a competitive advantage over smaller providers. Their analysis suggests that The Big Six “generally hedge further forward than independents but that external product availability is good enough for independent firms to match the Six Large Energy Firms’ hedging strategies”. The report appears to provide the energy giants with a good level of support after claims that industry leaders are holding back on the cutting of energy costs.
There are still a number of reasons why smaller suppliers may not be the best option. Smaller energy providers, although able to enter the market, are not established or well-known between consumers, meaning there is a risk in terms of trustworthiness of these companies. You could also argue that less overheads entail smaller, less efficient customer service teams.
To conclude, a consumer’s choice of energy supplier really does depend on what the consumer deems most important, because what lacks in the larger firms, is very much apparent in the companies outside The Big Six. There are few small suppliers that can match the investments presented by the major energy giants, yet the saying is all but true that with large, established companies, you can absolutely become a drop in the ocean.
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