Big 6 energy companies: Should you switch?

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The big 6 energy companies are the UK’s largest energy providers of gas and electricity.

The big 6 are:

  • British Gas
  • EDF Energy
  • E.ON
  • Npower
  • Scottish Power
  • SEE

Think of them like Manchester United, Manchester City, Liverpool, Chelsea, Arsenal and Tottenham in the Premier League.

The story of the big 6 dates back to 1989 with the Electricity Act signed by parliament which paved the way for the privatisation of electricity supply in Britain.
The Central Electricity Generation Board was broken up into three separate entities – Powergen, National Power and Nuclear Energy, as well as the National Grid which handled the transmission of electricity.

Through the 1990s an ongoing saga of further privatisation, acquisitions and mergers (largely by foreign companies) led to the creation of six major energy companies – all of which also began to supply gas – that we have today.

As of Q3 2018, according to Ofgem the big 6 held a combined market share of 75% for electricity supply and 73% for gas supply in the UK. This has dropped from the previously held combined market share across both gas and electricity of 100% in 2004. More on why that happened later.

Here’s a look at the big 6 in more detail:

  • British Gas – Began its existence in 1973 as a state-supervised gas supplier called the British Gas Corporation, with a long and varied history dating back to the reign of King George III in the early 1800s. Owned by British utility multinational Centrica since 1997 and now supplies around 15 million UK homes.
  • EDF Energy – Formed in 2002 after the acquisition and merger of a number of British energy companies, but today owned by the French state-controlled EDF. Largest provider of electricity, having acquired nuclear generator British Energy in 2009. Supplies around 5.6 million UK homes.
  • E.ON – Originally Powergen, one of the original companies formed after the 1989 Electricity Act. Became E.On in 2007 after being bought by E.ON AG, a German energy company. Supplies an estimated 4.6 million homes in the UK.
  • Npower – Formerly National Power, another of the original energy companies, becoming Innogy PLC in the UK in 2000. Acquired by German utilities company RWE and rebranded Npower two years later. Supplies gas and electricity to around 6.5 million customers in the UK.
  • Scottish Power – Unlike the name suggests, Scottish Power has many customers outside Scotland, despite being formed in 1990 out of the privatisation of Scottish energy supply. Acquired by Spanish energy firm Iberdrola in 2006, now supplies about 5.3 million UK homes.
  • SEE – Scottish and Southern Energy formed out of a merger between a Scottish hydroelectricity project and the Southern Energy board. UK’s second-largest provider with around 9 million customers.

Criticisms of the big 6 energy suppliers

The big 6 have been regularly questioned for using their dominance of the market to inflate prices unfairly. In the past they have often raised their prices at similar times, leading to criticism.

Claims of price fixing intensified during the 2013-2014 winter price rises, when five of the big 6 energy firms announced hikes in costs within weeks of each other.
This led to green energy advocate and owner of smaller energy supplier Ecotricity Dale Vince to accused his larger rivals of behaving “like a cartel”. Cripes.
However, it must be said that numerous reviews into the actions of the big 6 by both Ofgem (UK energy market regulator) and FCA (Financial Conduct Authority) have found no wrongdoing.

Over the last few years a number of small energy companies have emerged to rival the big 6. Here are some of them:

  • First Utility
  • Ovo Energy
  • Utilita
  • Utility Warehouse
  • Ecotricity
  • Good Energy
  • Octopus Energy

Often these smaller suppliers offer more competitive tariffs and better customer service.

Should you switch from a big 6 supplier?

It is thought that around half of UK households have never changed their energy supplier, so why are more people not switching?

Well people are used to the big 6 companies and fear changing to a smaller supplier that goes out of business.

But that particular concern has been solved by Ofgem, who offer a safety net for bankrupt suppliers. If your energy supplier goes bust, Ofgem will step in to protect credit balances with their process Supplier of Last Resort (SoLR) assigning these accounts to a fit provider within days. Bob’s your uncle.

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