Smaller energy companies: Should you switch?

Posted in:

When you work in the energy sector and you mention the Big Six, you’re not talking about the top of the Premier League. You’re talking about the Big Six energy companies, which are British Gas, EDF Energy, E.ON, npower, Scottish Power and SSE.

Why do we call them the Big Six? Besides the fact that they’re big and there are six of them? It’s because, between them, they provide gas for 78% of customers and electricity for 79%. The good news is that these figures are down from 84% each, according to Ofgem, just a year ago. The bad news is that an awful lot of people are yet to take advantage of the highly competitive energy market place and the deals being offered by small energy companies.

According to our friends at Ofgem again, there were 62 energy suppliers in the UK in December 2018, and every single one of them is working as hard as they can to come up with a deal to tempt you – yes you – to switch to them. The best small energy companies combine great value with new ways of doing things, whether that’s about the people they employ, the wages they pay or the fact that they provide energy from renewable sources.

What’s the risk of small energy companies going bust?

How often do websites like this simply shrug their shoulders and say ‘We don’t know?’ It’s not something you see much of, and that’s because they haven’t got the guts that we have, frankly, so we’ll come right out and say it:

We don’t know.

Small energy companies can often offer lower prices because they don’t have the overheads associated with bigger companies, and also may not be obliged to contribute to UK wide government schemes to cut energy usage. The flip side of this is that they may be more vulnerable to sudden shifts in the wholesale price of energy, which is probably why, between November 2016 and the end of 2018, eight smaller energy companies went bust. So the risk for any individual company is hard to gauge, but the point is it doesn’t really matter (unless you run or work for a small energy company that went bust, of course, in which case you have our sympathies).

From the point of view of the customer, if a small energy supplier goes bust then OFGEM will automatically switch you to a new provider, ensuring continuity of energy provision. Once you’ve found out which tariff the new provider has put you on, you can start to think about switching again, in which case this list of the best small energy companies might come in useful:

Octopus Energy

Launched in 2016, Octopus Energy supplies energy to more than 400,000 homes and is currently gaining new customers at an average rate of 30,000 per month. It offers a range of tariffs, with an emphasis on eco-sensitive energy supplies that is reflected in a green tariff comprising 100% renewable electricity and carbon offset gas. In addition to this they have a tariff especially designed around the needs of electric vehicle owners, and their commitment to transparency is reflected in a tariff which tracks the wholesale price of energy and provides customers with daily updates.

Robin Hood Energy

Guess where Robin Hood Energy is based? That’s right, it’s based in Nottingham (not the forest, we don’t think), where it’s owned by Nottingham City Council. It provides energy across the UK, however, and is run on a not for profit basis which it claims helps to keep prices lower. It offers a range of different tariffs, including some which are only offered to residents of Nottingham, and offers fixed, variable and prepayment deals for its customers.

So Energy

So Energy is a relative newcomer to the energy supply business, and it keeps prices competitive by using the latest technology to keep overheads lower and pass the savings on to its customers. It only offers electricity, which is sourced 100% from renewable sources, and it keeps the tariffs offered simple, only supplying customers who pay by monthly direct debit and not offering prepayment meters. One novel feature is an online poll which allows customers to vote on where they want their renewable electricity to come from.

Ebico

Ebico is a not for profit energy company which doesn’t have any shareholders. Any profits it does generate are used to fund projects which have been set up to lift people in the UK out of fuel poverty. Part of the appeal of Ebico is the simplicity of its most popular tariff – the Ebico Zero, which has only one unit rate, no standing charges and no exit fees. In addition to this it has another four tariffs, including ones for prepayment meters and Economy 7 users.

Tonik Energy

Tonik is an energy provider with a keen interest in green energy provision. To this end it only sells 100% renewable electricity tariffs and offers customers the chance to also include 10% green gas which is produced from animal and vegetable waste. Tonik is based in Birmingham and works with customers to cut energy usage as a whole by providing energy saving tips.

These are just a few of the many smaller energy companies in the UK, the best of which are valued for a combination of competitive pricing, great customer service and clear, transparent billing.

If that sounds like the kind of energy deal you’d enjoy then sign up for free with WeFlip and we’ll switch you to the best provider and the best deal, large or small.