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
4
minute read
posted

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 advantages of smaller energy providers?

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.
Am I protected if my independent energy supplier goes bust?
  • 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?

Ofgem is proposing more rigorous market entry tests for new suppliers, starting from spring 2019. This means they’ll need to demonstrate that they’re ‘fit and proper’ to enter the market, before they’re given a license to supply.

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

Supplier  Date SoRL/Acquiring
Future Energy Jan-18 Green Star
Flow Energy May-18 Co-op
National Gas & Power Jul-18 Hudson Energy
Iresa    Jul-18    Octopus Energy
Gen4U Jul-18    Octopus Energy
Affect Energy Aug-18 Octopus Energy
Usio Oct-18 First Utility
Snowdrop Energy    Oct-18 Nabuh Energy
Extra Energy    Nov-18 Scottish Power
Spark Energy Nov-18 OVO
One Select    Dec-18 Together Energy
Economy Energy Jan-19 TBD

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 £285** 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 £285 on their dual fuel energy costs based on Compare the Market data in February 2019.

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