22nd Feb 2016 15:16
LONDON (Alliance News) - Independent energy suppliers in the UK are slowly taking customers away from the so-called 'Big Six' energy firms, as the level of switching reached its highest point for four years during 2015, according to data from regulator Ofgem.
UK authorities campaigned throughout 2015 to encourage people to switch energy suppliers as the government and Ofgem tried to save customers money on their household bills as the industry remains under fire for allegedly not lowering prices enough.
The campaigns seem to have had a large impact, with the amount of people switching their energy supplier rising 15% year-on-year in 2015 to 6.1 million customers - the highest number of switches since 2011. That 15% equates to 820,421 more energy accounts being switched during the year than in 2014.
"It's encouraging to see switching levels at their highest level for four years. With more than 30 suppliers active in the energy market and hundreds of pounds of savings to be made, it's a great opportunity to shop around," said Rachel Fletcher, senior partner at Ofgem.
More notably, 40% of the people that switched supplier in 2015 moved to an independent supplier, suggesting the previous stranglehold over the market held by the so-called Big Six suppliers is wavering.
That 40% figure implies over 2.4 million of the 6.1 million people that switched in 2015 moved to an independent supplier.
That trend seems to have picked up speed throughout the year. Last year, it was revealed that independent suppliers held a collective market share of around 14% at the end of July, with those suppliers acquiring more new energy accounts in the three months ended July 31 than they held in total four years ago.
The Big Six comprise of British Gas, which is owned by Centrica PLC, SSE PLC, ScottishPower, E.On, EDF Energy and nPower. There are now around 24 independent suppliers in the UK, including London-listed Good Energy PLC.
The UK energy market has been under the spotlight for a while, with the Competition & Markets Authority currently carrying out an investigation concerning competition - the findings of which are expected to be released later this year.
Energy companies, especially the Big Six, have also been accused of failing to lower prices in line with the falls in wholesale oil and gas prices. All the Big Six companies have cut their gas prices this year, by an average of 5%, but the market feels this has not been enough.
Wholesale prices make up around half of a customer's overall bill.
British Gas, owned by Centrica, came under fire last week for revealing operating profits from the residential arm of the unit rose by around 31% despite cutting prices by more than 5% - with the company claiming higher consumption rates were the cause of the profit lift.
Good Energy scored points earlier this month after revealing it plans to cut its gas prices by more than 7% this year, undercutting the Big Six and demonstrating the appeal that independent suppliers currently have.
Customer service has also been an issue within the market. In September last year, Citizens Advice said the UK was facing a "customer service lottery" after new data showed a drastic variation in the customer service being provided by the main energy suppliers in the UK, including independent providers.
To put that into some form of perspective, SSE came top of the table in that customer service report last year whilst British Gas came in fourth. Independent supplier Good Energy came sixth.
"Whether customer service, price or both is what's most important to you, remember you always have a choice. If your energy company isn't up to scratch, vote with your feet and walk away," said Ofgem's Fletcher.
SSE shares were up 1.7% to 1,417.00 pence per share on Monday afternoon whilst Centrica shares were up 2.2% to 216.10p. Good Energy shares were down 1.7% to 183.50p.
By Joshua Warner; [email protected]; @JoshAlliance
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