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Are small energy companies cheaper?

Neil Faulkner
by Lovemoney Staff Neil Faulkner on 16 April 2009  |  Comments 23 comments

Read how close small energy companies' prices are to the big six at present, and get a top-tip on getting an accurate price comparison.

Have you ever considered switching to a smaller energy supplier? We know that many people like the customer service and transparent pricing that smaller energy companies offer.

We also get feedback about being treated much more fairly, especially from metered customers. It's clear that this is often the case, with Utilities Warehouse and Ebico getting the most positive feedback. However, on price they are at present struggling to compete with the best deals.

Low-energy users

'Low-energy user' sounds like someone who moves very slowly, but actually I'm using the generally accepted definition of low-energy user ,which is a household that uses 1,650KWh electricity and 10,000KWh gas.

I'm going to stick with the Guildford post code I've been using in other articles for consistency's sake, but you should look at your own area yourself, as this will just be an indication. Here are the cheapest dual fuel tariffs from the smaller suppliers in this area:

Low-energy user in Guildford

Supplier

Estimated annual cost

Telecom Plus (Utility Warehouse)

£607

first:utility

£636

Sainsburys Energy

£641

The National Trust Green Energy

£642

utilita

£652

Spark Energy

£686

If a small energy supplier is missing from any of my tables it's because they don't supply the post code I tested.

Some small energy suppliers actually take their energy from bigger suppliers and re-brand it. The National Trust Green Energy, for example, comes from npower.

If we compare the above tariffs (the cheapest tariffs from the small suppliers in this area) with the cheapest dual fuel tariff available, npower beats them, coming top of the table at £526 per year. That's £81 cheaper than the cheapest small supplier, Utility Warehouse. In fact, all six of the big six have cheaper tariffs than Utility Warehouse. That's disappointing, as we'd all like an excuse to leave the big six.

Medium-energy users

Moving on, a medium-energy user uses 3,300 KWh electricity and 20,500KWh gas per year:

Medium-energy users

Supplier

Estimated annual cost

The National Trust Green Energy

£1,145

first:utility

£1,154

Sainsburys Energy

£1,159

Telecom Plus (Utility Warehouse)

£1,183

utilita

£1,209

Spark Energy

£1,310

The cheapest dual-fuel tariff is from British Gas. At £1,037 per year, this is £108 cheaper than the National Trust Green Energy. Again, all six of the big six are cheaper, provided you're on one of their latest discount tariffs, and not sitting on their expensive standard ones! E.ON's fixed tariff was second cheapest at £1,047. More on that tariff in a second.

High-energy users

When I see the phrase 'high-energy user', I think of my frenetic young nephew, who's like a bumblebee trapped in a car. Today, though, I'm using the definition of a household generating 4,950KWh electricity and 28,000KWh gas per year:

High-energy user in Guildford

Supplier

Estimated annual cost

The National Trust Green Energy

£1,565

first:utility

£1,574

Sainsburys Energy

£1,582

Telecom Plus (Utility Warehouse)

£1,635

utilita

£1,652

Spark Energy

£1,823

The cheapest tariff in this test is from E.ON. It's E.ON's fixed tariff version one, which unbelievably is still available. Read about it in Extremely cheap fixed-energy tariff! In this post code and for trapped bumblebee homes the estimated cost is £1,406pa, £159 cheaper than the cheapest small supplier.

The next cheapest, if you're not interested in fixing, is from npower at £1,441pa. Five of the big six were above all of the smaller suppliers, with just Scottish Power slipping beneath The National Trust Green Energy.

A disappointing result from the small suppliers, but we'll keep you updated if and when the position changes.

Note on using our comparison tool

We occasionally get people emailing us saying our figures are wrong and that the energy comparison tool is telling them to switch to the wrong tariff. We double-check these claims, but so far we've found that the error was made when the reader put information into the form.

I believe that lovemoney.com's tool is the most accurate, because it's the only one that allows you to enter in the precise details of your tariff. After entering four basic details on the first page, you'll get a very rough estimate of the savings you can expect. However, on the second page of the form you must carefully select the closest match to your tariff in the two fields called 'Who is your current supplier?'

If you select, e.g. EDF Energy Other Tariffs, the tool will then take you to an extra page where you can either select the precise tariff and version of the tariff, or enter your tariff details yourself (for example, the standing charge, the first and second unit rates, and the KWh threshold). That's why the tool is so accurate.

If, however, you simply select British Gas' standard tariff when you're not actually on it, the tool will skip the extra page. This is because it already knows the details for this tariff, as it's the same for everyone. The result is that your quote will be less accurate and you'll email me saying my guidance is wrong and I'm not fit to use a keyboard, which isn't true! So please enter your details as accurately as possible for your own benefit.

> Compare gas and electricity though lovemoney.com

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Comments (23)

  • Neil Faulkner
    Love rating 32
    Neil Faulkner said

    Good comments, Leapfrog. I have to say you are really beginning to sound like an industry insider with a connection with UW now, but as your comments are useful for readers I shall let my suspicions pass.

    The fixed tariff I mentioned just a little bit in this article, but I linked to an article with more information about it. In that other article I explained it was a fix and how long it was fixed for. I did not mention the penalty, because it goes without saying that you are penalised for leaving fixed deals. In the extremely rare occasions when this is not so, I mention there is no penalty. Otherwise, our readership has the sense on that issue, so I save the space. Every sentence counts ;)

    You're right that I like that fixed deal a lot. My other article explains why, and I don't think you can easily argue with those arguments, but maybe I'll see you over there ;) Last year we were telling people to get on a fixed deal at a time when all the other commentators were saying don't switch. Anyone who took our advice then would have paid the lowest amount for energy over those 12 months.

    You're right about the npower discount and it's certainly worth discussing that. The thing is, the vast majority of our readers only switch (and only want to switch) once a year at most. In fact, if we even write about switching strategies that involve switching more than once a year, the only feedback we get is negative, usually to the tune of 'You just say that because you want us to switch again and again through your service'.

    It's widely accept by energy companies, comparison sites and the regulator that most people want to remain for 12 months with their supplier. Hence, the rules are that comparison sites must include all annual discounts in their results. That is by far the most practical and useful way to do it.

    You have made me think though that it might be worth trying to squeeze in extra information about this whenever I mention a tariff with an annual discount. You may think that's easy, but it's going to be difficult to keep articles flowing if I'm constantly giving two sets of figures: one with the discount and one without.

    Npower, as it happens, allows you to switch to another of its tariffs without losing its discount. Also, I've never read any complaints from anyone about how long it takes to get npower's discount or of waiting 18 months. Nor has the company that runs our energy comparison tool. Indeed, npower pays it's discount as a credit on the 12-month anniversary.

    I don't begrudge Npower using a loyalty scheme for keeping them in for 12 months, although it makes it a darn sight harder to compare prices with all these different schemes. That's one advantage of many of the smaller companies, e.g, UW: you know where you stand.

    You also mentioned BG's exit fee. Again, that's if you leave well within 12 months and that simply doesn't interest almost every single person who bothers to switch energy, as far as the vast amount of feedback is concerned.

    Guys - if you want to know more about switching more regularly, you need to make your voices heard! Personally, I think switching twice a year, once just before winter and once just after winter, saves the most money, but no one wants to hear or believe it so I don't write why. If you're interested to know why I think this, with a little thought you could work it out for yourselves if you read this article:

    http://www.lovemoney.com/news/household-bills/recent-energyprice-reductions-were-a-sham--3216.aspx

    As for customer service, I only have space for one sentence per article on the relative customer service experiences of th big six versus smaller suppliers, and I always make sure I get it in. It's not interesting enough for more than that, as it's common knowledge. You either choose low prices and pay for that by switching more regularly, or you pay extra money to get the customer service. (Note, smaller suppliers have, on occasions, had the cheapest deals, so that isn't always true.)

    I hope you've all found this long thread as interesting and useful as me. I'll try to finish my research on UW packages today. (I've already started.)

    Neil

    Report on 21 April 2009  |  Love thisLove  0 loves
  • Leapfrog
    Love rating 1
    Leapfrog said

    Vertigo, you've disappointed me but not surprised me. Why would the fact I appear to know as much as/more than you about the energy industry make me 'an insider with a connection to UW'? That's akin to me accusing you of being in E.on's pocket when you are openly pushing their fixed deal in a market where the trend is (at the moment) downwards. I would never accuse you of such a thing. Oh well, I'm really looking forward to the article now. Not, lol.

    You've never heard any complaints about the amount of time npower take to get the 'annual' discount out on time? You should get out on the internet more, Vertigo.

    http://forums.moneysavingexpert.com/showthread.html?t=1569801

    Can't imagine that poster's circs to be in any way unique. And how about some user reviews on this company?

    http://www.reviewcentre.com/reviews82622.html

    I'm assuming you haven't heard of the sculpting problem', either?

    http://forums.moneysavingexpert.com/showthread.html?t=822299&highlight=npower+sculpting

    I say again, the switching sites exist for one reason only - to make commission for their owners. Your switching site, I suspect, is no different.

    Here's a tip for reader's interested in being extra savvy. Forget switching through a switching site. Check out the various 100% cashback stes for deals on switching to the various energy companies. Thereby the money goes to the punter and not to the switching site. Whisper it, but I believe Scottish Power are currently paying ONE HUNDRED POUNDS for a dual fuel switch through at least one such site. This is the sort of money that's on offer for switching sites in the form of regerral commission. Wait until you get the money (maybe 3 months) and simply switch again through the cashback site. take care not to land on a tarif that has exit fees, though. I'm off now.

    Report on 21 April 2009  |  Love thisLove  0 loves

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