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Are small energy suppliers reliable?

Are small energy suppliers reliable?

We all like familiarity. And when it comes to energy suppliers that often means sticking with household names, like one of the ‘Big Six’, rather than switching your essential services to an underdog.

But some newer and smaller suppliers offer great deals and the potential for better customer service. So are they reliable, and is it worth switching?

Peter Earl
From the Energy team
minute read
posted 31 JANUARY 2020

Why are there more small energy suppliers nowadays?

Before 2013, the Big Six energy providers controlled almost 100% of the UK energy market. Energy regulator Ofgem then introduced Simpler, Clearer, Fairer reforms – to give alternative providers a fair shot at the market and to increase competition.

Today, there’s healthy competition between more than 70 energy suppliers, which gives consumers a much wider choice when it comes to finding a great tariff.

Ofgem’s changes, and the government-backed Energy Switch Guarantee, have also made it much easier for consumers to switch.

So much so that from January to May 2019, nearly a third (32 per cent) of the total switches for gas and electricity were to small and medium-sized suppliers (according to Ofgem data).

What are the advantages of smaller energy providers?

  • Lower overheads often translate to lower costs for customers.
  • Smaller suppliers don’t face the same expensive legal obligations that the Big Six do.
  • Which? and the Citizens Advice league table awarded smaller energy suppliers top spots for customer satisfaction in 2018.
  • more competition leads to greater levels of tariff innovation and variety, and often lower prices.

What are the disadvantages of independent energy suppliers?

  • Since many suppliers are new, it can be tricky to dig up information about them and establish confidence in them.
  • Independent providers might struggle to cope with a sudden surge in new customer accounts.
  • They may be slower to respond to customer queries than larger companies that have greater levels of capacity and more established services.

Am I protected if my independent energy supplier goes bust?

One of the biggest worries for customers is whether small suppliers are as reliable as the Big Six. Or whether they’ll be protected if a provider goes bust.

And some smaller suppliers have been forced out of the market, but Ofgem has introduced safety measures to protect customers if this happens:

  • They’ll ensure customers’ energy supply and credit balance is protected if a supplier goes out of business. This means appointing a new provider on the customer’s behalf - known as a ‘supplier of last resort’ (SoLR).
  • They’ll make sure that customers aren’t financially worse-off with a SoLR.
  • They’ll vet any SoLR to be sure they can meet their obligations.
  • They’ll enable customers to either move on to a contract with the SoLR or switch to another supplier, with no cancellation fees.

Taking regular meter readings yourself can also make things easier if your supplier goes bust, since this will minimise the chance that they owe you any money.

How will new energy suppliers be regulated?

In June 2019, Ofgem introduced more stringent checks for any new suppliers wishing to enter the market, which will hopefully slow the rate of supplier failures by requiring would-be-providers to demonstrate that they can pass a fit and proper test.

Here’s a list of suppliers that have exited the market since the beginning of 2018, and the suppliers appointed by Ofgem to take over supplies or the acquiring business.

Supplier  Exit date SORL/Acquiring Business
Solarplicity August 2019 EDF
Cardiff Energy August 2019 SSE
Brilliant Energy March 2019 SSE
Our Power January 2019 Utilita
Economy Energy January 2019 OVO Energy
One Select December 2018 Together Energy
Spark Energy November 2018 OVO Energy
Extra Energy   November 2018 Scottish Power
Snowdrop   October 2018 Nabuh Energy
Usio October 2018 First Utility (now Shell Energy)
Affect Energy   September 2018 Octopus Energy
Gen4U September 2018 Octopus Energy
ePHase July 2018 Not Reported
Iresa July 2018 Octopus Energy
National Gas and Power July 2018 Hudson Energy
Flow Energy May 2018 Co-operative Energy
Future Energy January 2018 Green Star Energy

The new regulations should help improve standards and keep the energy market fresh and competitive. And that will, hopefully, boost consumer trust in all energy providers.

Where can I compare energy suppliers?

Right here, with Compare the Market’s handy comparison tool.

Customers who decide to switch could save up to £399** per year on their energy bill. So why not compare energy prices with us today, and see if you can save.

**Where a saving can be achieved 40% of people could achieve a saving of £399 on their dual fuel energy costs based on Compare the Market data in November 2019.

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