Small energy suppliers: All you need to know

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Last updated: 13 April 2021

When it comes to energy suppliers, many prefer to stay with traditional tried and trusted brands such as British Gas or EDF. These companies, though slightly more expensive, are seen as reliable and efficient. However this guide is going to dispel some of the myths about smaller energy companies. With recent changes to Ofgem regulations, there has been a huge influx of suppliers into the market that can potentially offer you cheaper, reliable energy. It will take you through the advantages and disadvantages of these suppliers so that you can compare energy tariffs for the best product for your needs.

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Who are the small energy suppliers?

The UK energy market has been dominated by the ‘Big Six’ energy companies: British Gas, E.ON, npower, SSE, EDF Energy, and ScottishPower. However in 2013 the ‘Office of Gas and Electricity Markets’ introduced reforms that were aimed to make the energy sector fairer and simpler. We are now seeing a flood of small to medium-size energy suppliers which include: Shell Energy, Ovo Energy, Utilita, Ecotricity, Bulb, Octopus Energy and over 50 more. The original ‘boom’ is starting to decrease now some companies are finding it harder to maintain low prices. But, we are still seeing a big growth in the medium sized companies listed above who can offer you better prices and services than the traditional suppliers.

Advantages of small energy suppliers

There are a number of advantages to choosing a small energy supplier:

The desire to get a foothold in the market will often lead to better customer service.
Increase in the amount of energy suppliers gives you as a customer greater choice, and can help you find a cheaper tariff.
They generally have lower overheads, making it easier for them to offer cheaper prices.
Smaller energy suppliers are exempt from the Energy Company Obligation (ECO) which means they have more money to spend on customers.
If you’re looking for renewable energy, green energy suppliers such as Ecotricity offer more environmentally friendly plans.

Disadvantages of small energy suppliers

Despite the advantages, there are significant disadvantages of choosing a small energy supplier:

They are not certain to exist for your entire energy plan. In fact, 8 small energy suppliers closed their doors last year.
With more established energy companies, you will be able to research and get accurate reviews of their service. With smaller energy suppliers you don’t always have this luxury, and it can often be hard to find information or reviews.
There has been a huge increase in customers for these companies and can struggle to deal with such an influx of customers.

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What if my energy supplier goes out of business?

Luckily, Ofgem regulations mean that if your supplier goes out of business you will not be left without energy. You will automatically be switched onto a different company and your in-credit balance will remain intact. However, the tariff may change and could become more expensive. It’s important to take a meter reading straight away and wait until you have been switched to compare energy tariffs. It could be the case that the one you have been switched on to is the cheapest tariff anyway!

What to look for

When judging energy suppliers there a few things to look out for in order to get the best energy deal for you:

As these companies are relatively new, you should try and get as much information as possible about their customer service record
You can choose companies with more renewable energy generation. This will be included in the ‘fuel mix’ of each company which should be relatively easy information to find.
Think about the type of tariff that suits you best. If you use a lot of electricity at night, an Economy 7 or 10 tariff might be more suited to your needs. These offer cheaper prices during the nighttime. Or, if you know you may be behind on payments perhaps a prepayment meter is a better option.