The alternatives to the Big Six energy providers
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?
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 |
|
£1,172 |
£248 |
Fixed until 31st May 2015, £30 cancellation fee per fuel if switching before end of fix |
|
|
£1,178 |
£242 |
Fixed for 12 months, £10 cancellation fee applies if switching before end of fix |
|
|
£1,183 |
£237 |
Fixed until 31st March 2015. No cancelation penalties |
|
|
£1,202 |
£218 |
Fixed until 30th April 2015. No cancellation penalties |
|
|
£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
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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.
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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.
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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!
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06 November 2013