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The alternatives to the Big Six energy providers

lovemoney staff
by Lovemoney Staff lovemoney staff on 30 October 2013  |  Comments 10 comments

Instead of blindly paying one of the Big Six energy companies, why not seek out some more competitive deals from a less well-known provider?

The alternatives to the Big Six energy providers

Four of the so-called 'Big Six' energy companies – SSE, British Gas, npower and ScottishPower – have already announced price rises this winter. The other two – EDF and E.On – are almost certain to follow suit.

Senior management from all six companies have now appeared before the Energy and Climate Change Committee to defend their position.

They all claimed that wholesale prices are rising, pushing up their costs. But this was refuted by Dale Vince, founder of smaller player Ecotricity, who said: "If you look back over 12 months, then they are not justified in raising their retail prices because of wholesale movements in this year". Indeed, his company has announced a price freeze.

And Co-operative Energy, which shares its name and its philosophy with the wider Co-operative Group, only increased its prices by 4.5%, half the average 'Big Six' increase.

So instead of just accepting the rises and sticking with a Big Six supplier, why not have a look around at some of the smaller companies in the market?

The smaller players

Ironically, one of the smaller companies has the cheapest dual fuel tariff on the market right now, as our table below demonstrates.

The most well-known alternative companies are First Utility, Ovo and the Co-op but there are still more to choose from.

It’s important to check who owns the company, as in some instances a Big Six provider will be behind it. This is the case with Ebico and Marks & Spencer Energy, which are both owned by SSE, and Sainsbury's Energy, which is backed by British Gas.

Many smaller companies tend to focus on green or renewable energy sources. Good Energy, for example, produces its own energy from certified renewable sources such as wind and water.

As the company then sells this energy back to customers, prices generally stay the same and haven’t changed since April 2009.

Ecotricity works in a similar way and says it was the first company to offer green electricity back in 1996. Any profits it makes go back into funding the building of new sources of green energy – also called ‘Bills for Mills’.

Ovo promises simpler statements and more use of renewable technology to generate energy.

Another company supplying energy is Utility Warehouse. This site promises to give its members the cheapest tariffs available and it works as a savings club with members getting discounts for signing up their friends.

However, there has been quite a bit of negative press around it and it’s been slated for being complicated and unclear. Therefore with this, and any new provider, it’s worth doing your homework first and comparing a few different tariffs before you choose one.

See if you can switch and save on your gas and electricity

The cheapest tariffs

Here are the cheapest fixed tariffs right now for dual fuel customers. You'll notice that two of them are from non-Big Six companies.

Supplier and tariff

Average cost

Average saving*

Notes

First Utility iSave Fixed v11 May 2015

£1,172

£248

Fixed until 31st May 2015, £30 cancellation fee per fuel if switching before end of fix

E.ON Fixed 1 Year v5

£1,178

£242

Fixed for 12 months, £10 cancellation fee applies if switching before end of fix

EDF Blue +Price Promise March 2015

£1,183

£237

Fixed until 31st March 2015. No cancelation penalties

npower Price Fix April 2015

£1,202

£218

Fixed until 30th April 2015. No cancellation penalties

Ovo New Energy Fixed

£1,226

£194

Fixed for 12 months. £30 per fuel cancellation fee if switching before end of fix

*Based on a typical dual fuel tariff costing £1,420 (Source: Ofgem). All costs are for a yearly average usage dual fuel household paying by monthly direct debit. Average usage defined by Ofgem as 16,500 kWh p.a. of gas and 3,300 kWh p.a. of electricity.

Data correct as of 30th October 2013

What’s the catch?

Many people may be put off switching to a small provider because of its size or the options for contacting it – for example, First Utility is online only.

There is also the danger that if a smaller company brings out a market-leading tariff, the size of the company will prohibit it from dealing with the influx of new customers, as has been the case with First Utility earlier this year.

We’ve also reported problems with another small provider, Spark Energy, which has an appalling track record when it comes to customer service.

However, this problem is not unique to any energy company as we’ve also had a lot of complaints in from customers of the Big Six providers.

If you’re looking to switch the best thing to do is first compare the prices available. It's up to you if you're choosing to switch for cheaper prices or because you prefer how a company works but first make sure you're able to switch without a penalty.

See if you can switch and save on your gas and electricity

This article has been updated since its original publication

More on gas and electricity:

How to beat the winter energy price rises

Is switching energy providers pointless?

Ten ways to save on energy

Renters missing out on £190 year by not switching energy suppliers

How prepayment, credit and smart energy meters work

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Comments (10)

  • Aitken B
    Love rating 146
    Aitken B said

    The "big six" are basically so closely in lock step that it would suggest a cartel. Of course running a cartel in the UK is illegal.

    We are fortunate are we not that we have OFGEN to look after our interests.

    The fact that there is an enquiry into gas prices and how these "Big Six" operate them is in no way to suggest that OFGEM have not been paying attention.

    Report on 27 November 2012  |  Love thisLove  0 loves
  • oldhenry
    Love rating 343
    oldhenry said

    OFGEM was created by politicians to look after their mates. It is not in any way there to protect the users. It was a whitewash set up when energy was thrown to the capitalists to show how safe we were!

    What a bunch of morons we were - tell Sid we were stuffed. Sadly, Labour are as much into capitalism as the tories now so you won't see any change again. You better get used to being cold in your houses as we were in the good old days of coal fires.

    Report on 27 November 2012  |  Love thisLove  0 loves
  • PDB11
    Love rating 75
    PDB11 said

    "The "big six" are basically so closely in lock step that it would suggest a cartel". And the legislation on fewer pricing models and automatic tariff moves is going to push them even closer.

    I'm with Ecotricity. Nothing to do with price; I like their business model, investing the profits in cleaner energy. But since they're linked to the incumbent utility's standard tariff, I do wonder how this new legislation will affect them.

    Report on 28 November 2012  |  Love thisLove  0 loves
  • loddon
    Love rating 0
    loddon said

    Utility Warehouse do NOT promise to give the cheapest tariffs available. You need to read the small print, as I did when I was encouraged to join them. What it actually says is that they will always match the cheapest STANDARD tariffs available but not all available or special tariffs. This is very different and you should try not to mislead.

    Report on 03 November 2013  |  Love thisLove  0 loves
  • dmhzx
    Love rating 30
    dmhzx said

    Finding the best deal is ALL about knowing with a fair degree of accuracy what your consumption of both gas and electricity will be for the forthcoming year.

    Even after 'simplification' as requested by Ofgem *the cartel's friend, and consumers' enemy".

    Gas standing charges vary from £75.08 to £190.02 (where the one with the highest standing charge (NPower) has the lowest KWh charge)

    Electricity standing charges vary form zero to £125.02, where the one with the lowest standing charge (NPower) has the highest KWh charge.

    So if you don't use much electricity or gas your best buy in Elect is Npower, and you worst buy in Gas is also NPower

    Oh and when you ask for a quote from Utility warehouse, the prices shown on screen exclude VAT. They do at least warn you that using these prices to compare with anyone else (everyone else tells you the price you'll have to pay), you'll need to get you calculator out.

    For my current usage Npower is best for gas and FirstUtility for electric, but when I install more insulation this year that will all change, but I won't know by how much for about a year.

    So don't hold your breath for anything the government does making things easier for the consumer, or reducing bureaucracy for the supplier, or indeed slowing down the growth of public sector parasitic bureaucrats. The only thing the government is any good at is over complication..

    .

    Report on 03 November 2013  |  Love thisLove  0 loves
  • CuNNaXXa
    Love rating 410
    CuNNaXXa said

    The only thing the government can do that will REALLY benefit us will be to introduce a simplistic and quick change process so that we, the consumer, can change supplier with no lengthy delays or delaying tactics.

    Ideally, a seven day turnaround or less is ideal, giving the consumer the option to change on the fly, within reason. At the moment, there is a significant delay in switching providers, which discourages many of those wishing to switch. After all, by the time the switch has happened, your new provider may have already increased their own prices to follow suit.

    If people could switch providers easily and quickly, this would stimulate better competition, and force the big six to be more competitive. At the moment, the big six rely on complacency and the length and aggro of switching to force people to do nothing. They have a captive audience. Make switching much simpler and quicker, and watch the big six start fighting for their custom.

    Also, long tie in periods should be illegal. The maximum you should be tied in to any consumer contract should not exceed one year. When you see consumable contracts that last two or three years, it becomes worrying. Of course, some contracts will need to be longer, such as Hire Purchase agreements, but things such as gym membership, phone contracts, broadband or line rental, and energy providers, should be limited so that we are not nobbled when we least need it.

    Report on 03 November 2013  |  Love thisLove  0 loves
  • numero09
    Love rating 1
    numero09 said

    One of the other factors that stop consumers switching is the exit fees or 'switching tax'. There may be a company that's £59 a year cheaper for a dual fuel deal, but when you are then charged £30 per fuel to leave, then you'd think twice about it. The 'switching tax' is anti-competitive and should be banned.

    It was only introduced about 5or 6 years ago, so where was Ofgem when it happened. Most of the fees started off at around £10 a fuel, now they're up to around £50 in some cases, yet not one single word from either Ofgem or the politicians, surprise, surprise.

    Report on 03 November 2013  |  Love thisLove  0 loves
  • BruceK
    Love rating 16
    BruceK said

    Recently switched from EON because they scrapped their 'No standing charge' tariff for low users. Switched to Scottish Power but guess what; Scottish Power have just announced that they have decided to scrap their 'No standing charge' for low users!

    The excuse is that the government has told suppliers to reduce the number of different tariffs they offer. Their target ~ the elderly!

    B*****ds!

    Report on 04 November 2013  |  Love thisLove  0 loves
  • jegwe
    Love rating 1
    jegwe said

    Comparing tariffs is virtually impossible. I stay with British Gas, no doubt getting ripped off in the process, because I am not paying by direct debit. Whenever I have looked at alternatives I am always told that I have to pay by direct debit. This means giving carte blanche to the energy company to dip into my bank account whenever they want to and to change the payment arbitrarily whenever they like. I refuse to let them.

    A friend in Germany pays by monthly direct debit and if she has overpaid, the energy company refunds the overpayment in the same month. Why does the government not enforce a similar system here. It would not cut energy prices, but it would stop a major rip off in terms of companies overcharging customers and keeping the overpayments.

    Report on 05 November 2013  |  Love thisLove  0 loves
  • meldrewreborn
    Love rating 70
    meldrewreborn said

    jegwe

    While i understand your dislike of DD, there is no reason why the system cannot be made to work effectively.

    In setting the DD amount the energy company need as accurate as possible estimate of your consumption. In my case my electricty use is stable but my gas consumption varies with the weather - the winter is the most important period - between 14,000KWh and 18,000 KWh per annum. If I give the energy company the lower figure I'll almost certainly underpay and then later they'll want to up the DD to recover the underpayment and to charge the "right amount" going forward. If I give them the higher consumption then I'll almost certainly overpay, and later my DD will go down. I think that its good to provide regular monthly readings and to get an updated bill and account statement as a result. nPower only spit out statements every 6 months so they're not a supplier i'd normally use, because their system tends toward suprises - both good and bad.

    By sticking with BG you're probably overpaying and by turning your back on DD you're compounding the error. If you are an average user you'll probably be paying £200 per annum or more than you need to. Most of us would find that a high price to pay for avoiding DD and not switching. I'd suggest you look at OVO for a fixed priced deal on DD. If you set your consumption a bit on the high side you'll overpay a bit and then OVO give you 3% interest on your credit balance. You can submit readings every month and get a revised bill and an up to date statement. If your DD needs to change, you'll get notification prior to the event and it should only move a little. Its the long period between readings and a too low initial estimate that lead to most DD problems, so submitting monthly readings and getting regular bills will alert you any problems at the earliest possible time.

    I have DD for my domestic fuel, water, phone / broadand, entertainment package, council tax. I'd recommend you give OVO a try, they're actually quite decent to do business with. I've been with them in the past but not currently, as I got a better deal from EDF at the time, but wouldn't hesitate to go back should the numbers fall that way.

    Report on 06 November 2013  |  Love thisLove  0 loves

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