Last updated: 9 September 2020
In this guide, you’ll learn the following:
What is a small energy supplier?
Do I have to do anything different to change to a smaller supplier?
Are small energy suppliers cheaper?
Are small energy suppliers greener?
Aren’t small energy suppliers more likely to go bust?
What do I need to consider before switching
If you’ve decided to change supplier, it can be difficult to know where to start. While the so-called ‘big six’ energy suppliers are a reassuring choice thanks to their proven reliability, the energy market has been disrupted by dozens of small energy suppliers emerging over the past decade or so. From green energy to stand-out pricing, you may find that when you change utility supplier, you discover a company you have never even heard of before is the one that suits your needs perfectly.
So, which of these newcomers can you rely on to give you a good deal, and which is the best small energy supplier for you, if any? Our handy guide is here to help.
Energy suppliers are described by size based on their customer base. At the top of the scale are the big six – well-established energy companies that have the largest market share of energy customers in the UK.
That said, the market is changing: OVO Energy has already invaded this long-standing group by purchasing SSE’s entire domestic energy supply business, propelling it into the big six. Elsewhere, E.ON is in the process of assimilating npower’s customer base into its own, leading to the prospect of the big six becoming the big five.
Back in 2013, the big six enjoyed an almost total monopoly over the energy market, but now there are between 40 and 70 energy suppliers on the market, making your options virtually limitless. However, that number is also almost constantly changing, as many small energy suppliers have gone bust – a risk you should consider when changing supplier, although it’s not one that should make you rule out these smaller businesses. That’s because Ofgem will step in to ensure your supply won’t be disrupted should your supplier (big or small) go bust.
If you’ve decided that smaller is better, then you’ll be pleased to know that switching is just as easy as it is with any other supplier. Some companies still value the direct approach, so you can call them directly and make the change, but most will be listed on energy comparison sites alongside the big six.
Whether you use a comparison tool or shop around manually, you should compare energy deals from all the brands on your shortlist. Factors such as your location can change your quote quite significantly from the estimated, generic quotes you see on brand homepages.
Changing to a small supplier won’t exempt you from any exit fees that may come with your current tariff, but some small energy suppliers do offer to pay this for you as a further incentive to switch.
Small energy suppliers have a reputation for being more affordable than the big six, and in many cases this is true. There are many reasons, but one of the key factors is the allowances made by the government for smaller energy suppliers.
Due to the government wanting to encourage competitiveness in the energy market, and therefore create better pricing for customers, small energy suppliers are exempt from the Energy Company Obligation (ECO), a fee placed on energy companies with the aim of lowering carbon emissions. With the money saved from exemptions like these, small energy suppliers can pass savings onto the customers. Small companies also have lower overheads, so savings can also be passed on from here. However, exemption from the ECO doesn’t mean these suppliers do not value green energy; in fact, many small energy suppliers source their energy from renewables.
You should bear in mind that smaller companies are also exempt from other schemes, which may make them unsuitable for your individual circumstances. For example, while big six suppliers must offer the Warm Home Discount, small suppliers are not obligated to do so, even if you’re eligible. Check before you switch.
Green energy is a big topic, and so many new suppliers entering the market make sure to offer this feature to potential customers. The level of commitment to renewable energy can range widely: some offer 100% renewable electricity as standard, with varying levels of carbon-neutral gas, while others simply offer a few plans with differing green credentials. If you want to change supplier to be greener, then you should compare energy deals and refine your search to green energy suppliers.
Many small companies model a whole ethos around renewable energy, which makes them a highly appealing choice, but some members of the big six also have renewable offerings.
In 2019 alone, almost half a dozen small energy suppliers went bust. That said, the risk shouldn’t stop you from taking advantage of a great deal. If your supplier does go bust, Ofgem will step in to place you on a new tariff with a new supplier – this is a plan you are free to leave without exit fees, so you can compare energy deals and find a better supplier if you wish. There will be no disruption to your service, the only difference will be that you may have to pay a slightly higher bill for the month the business fails, as the ‘deemed’ tariff that the Ofgem-selected supplier places you on will likely be more than your previous plan.
Essentially, if you stand to save money or enjoy green energy with a small supplier, it’s almost certainly worth the risk. After all, suppliers like Bulb have grown rapidly despite only forming in 2016, so there are plenty of success stories for small suppliers too to counter the loss of companies like Breeze.
Whatever the size – big, small, or somewhere in-between – of the energy company you plan to go with, always compare energy deals when you start the search for a new energy provider. Many small energy suppliers offer excellent deals, but the big six may be able to match them. You may even discover that your current provider offers a better tariff than the one you’re currently on, so you won’t need to change supplier at all. Whether you’re committed to change, want to find a green plan, or just want to save money, always compare energy deals before you change utility supplier.
While some energy suppliers offer great deals, they may also come with limitations. Prepaid meters, Economy 7 tariffs, and smart meter rollout, for example, may not be offered by the smallest companies. Other extras that the big six can offer, such as boiler cover or EV tariffs if you have an electric vehicle, are also rarely available from smaller suppliers.
On the other hand, there are also small suppliers like Ebico that are both well-established and who specialise in specific areas. Ebico’s big selling point is that it’s focussed on helping customers who are dealing with fuel poverty. It may therefore suit your circumstances better to opt for Ebico if you are part of this group, as it will offer better customer service and extra help compared to others.
The answer to this is the same as it would be to any decision regarding the big six. You should decide exactly what you want from your provider and keep it in mind as you look to change supplier. Whether you value green energy, low prices, great customer service, or a mix of the above, the key is to compare energy deals and do your research on each supplier. While small companies do not have the track record of the big six, sites like Trustpilot should give you a good sense of their overall dependability.