This guide is intended to provide general guidance only. It is not intended to give you advice on your personal financial circumstances. You should seek independent professional advice if you’re unsure about anything mentioned in this guide or what choices to make
The Big Six energy companies are the UK’s biggest and oldest private energy suppliers. They have their roots in the 1989 the UK parliament signed the Electricity Act, which paved the way for the privatisation of the electricity supply in Great Britain.
Over the course of the 1990s this led to creation of six major energy companies, all of which also began to supply gas. Today we refer to these companies as the ‘Big Six energy suppliers’, and despite strong competition from independents over the last decade, they still provide energy to over 90% of homes in the UK according to Cornwall Energy.
Confusingly, the ‘Big Six’ are often mistaken in the media as the UK’s energy distributors (those that control the physical networks), or assumed to be the same as its energy generators (those who own the power stations). Although the Big Six are sometimes involved in these businesses too, particularly generation, when referring to the Big Six we simply mean the six major suppliers that sell energy to customers.
The Big Six energy suppliers as we know them today are largely the legacy of energy privatisation that occurred in the 1990s. This began in 1989 with the signing of the Electricity Act, which resulted in the break up of the Central Electricity Generating Board into three generating companies: ‘PowerGen’, ‘National Power’ and ‘Nuclear Energy’, as well the transmission company the ‘National Grid Company’. These companies were privatised at different points in the 1990s.
In the meantime in the gas market, British Gas was privatised in 1986 and demerged a decade later into a retail arm (British Gas), a production arm (BG Group) and a distribution group (National Grid). The separation and privatisation of supply, distribution and energy production in both the gas and electricity markets paved the way for the creation of the six supply companies we know today.
British Gas (Centrica) was formed in 1997 and began selling electricity a year later. EDF was born in a series of mergers in 2003. E.ON UK resulted from the acquisition of Powergen in 2002, while npower emerged from RWE’s 2002 purchase of Innogy. Scottish Power dates back to 1990 when it was created prior to electricity privatisation in Scotland. SSE (formerly Scottish and Southern Energy) was formed in 1998 following a merger between two previously privatised Scottish electricity companies.
Despite the fact that the Big Six were born in a rather volatile series of privatisations, breakups and mergers, their market shares have remained remarkably stable over the years, particularly in terms of electricity customers.
The following graph from Ofgem’s 2014 State of the Market Assessment show how the Big Six domestic electricity supply market shares have developed over the last decade:
E.ON have been the only major loser over the last decade, sliding from having had around 22% of electricity customers to having around 17%. SSE was the major gainer between 2004 and 2014, and in the last couple of years smaller suppliers have finally started to make inroads into the market, jumping to around 7% by 2015.
In the gas market things are a little more interesting, though not by that much.
The traditional dominance of British Gas as the national supplier has gradually been eroded over the years, as more and more customers switch to ‘dual fuel’ tariffs with one supplier. The 15% decline in British Gas’ share has been taken up by a variety of other Big Six firms, as well as sharp growth in the smaller suppliers since 2011.
In recent years the phrase ‘The Big Six’ has often found its way into the national press, largely in response to growing frustration at higher energy bills, which more than doubled over the last decade.
In 2014 concerns about rising prices and declining trust in energy providers prompted Ofgem to refer the energy market in the UK to the Competitions and Markets Authority, to investigate concerns that features of the market were preventing, restricting and distorting competition.
When it reported back in July 2015, the CMA found that households on a Big Six standard variable tariff could each save up to £160 a year by switching to a cheaper external tariff with a smaller independent provider.
The CMA have also found, that the pricing strategies adopted by the Big Six, show that they have considerable market power over their customers. This has resulted in a two-tier energy market. The smaller tier is the active customer market, which is very competitive as independent suppliers can compete for customers on a level playing field with the Big Six. The larger tier is the inactive customer market, in which nearly all customers are on standard variable tariffs with a member of the Big Six.
The ‘inactive customers’ on the Big Six standard variable tariffs tend to pay higher prices; in the smaller market for ‘active customers’ there is fierce competition driving prices down.
By early 2015 the gap between these two tiers had grown to as much as £260 a year.
For more detail on the two-tier market in energy check out our piece on The rising price of loyalty to the Big Six. Or for a more tongue-in-cheek look at the issue, watch our little video.
Looking at the graph it would be easy to assume that the Big Six providers are always more expensive that smaller companies. And while this is often the case, it isn’t always so: it depends on what type of tariff you are looking at. Lets look at the variable tariffs first.
The following chart compares average variable tariff deals for the Big Six. Surprisingly there are many small providers that also charge very high tariffs to their variable tariff customers, typically long-standing ones.
In these figures from September 2015 OVO Energy has the most competitive variable tariff among major energy suppliers, at around £1,000 a year. This reflects our commitment to fair pricing. For fixed price deals the pricing is quite different.
Fixed price deals tend to be the cheapest deals on the market, and lock customers into a fixed price for a set term, generally a year. One look at the pricing above shows that while the best prices are generally offered by smaller providers, a number of Big Six providers are still competing with low-priced tariffs – EDF and Scottish Power most notably.
As we can see from these figures, while the Big Six firms have a tendency to be more expensive, generalising about their cost doesn’t really make a great deal of sense. A better way to think about the market is that the fixed rates offered to customers prepared to switch provider are often considerably cheaper than any standard variable tariffs available.
Probably the most commonly asked question when it comes to switching suppliers is “how much will I save?”. In truth, you can’t really answer this question with any accuracy until you get a quote. That’s because the answer will vary greatly depending on what your current tariff is and how much energy you use.
The people who will likely benefit most from switching are those who are on a standard variable tariff (over half of big six customers). Following which tariff you're on, the main variable is how much energy you use. In the graph below we show how much someone would save switching to OVO Better Energy from the Big Six depending on energy use. The small, medium and large house sizes are based on the three typical house sizes Ofgem (the energy regulator) uses to model consumption.
Average savings a year:
Of course this varies depending on who you are currently with, and changes quite regularly with price changes from the suppliers.
As such you should only ever take estimates like this to be just that, estimates. If you know your current tariff and how much energy you use or how much you spend each year, it will only take 5 minutes to get an accurate quote.
Given that a lot of people stand to save £100 - £300 the first year they switch suppliers, it’s surprising to hear that 60% of homes have no recollection of having ever switched. Perhaps even more remarkably, 40% of homes are still supplied by their regional incumbent – over 15 years after the market was liberalised.
According to market research by Ofgem, the main barriers to switching among those who have never switched are as follows:
The primary reason for people not switching remains that they are happy with their current supplier, which on the face of it is a rather good result. Although once we look a little more clearly at the data, it becomes clear the benefits of switching are not well understood.
According to the same Ofgem research, the reason why people switch is very clear: because they think it will save them money. It is the major trigger for three quarters of people changing to a new supplier.
With money proving the main reason people switch, it is obviously important that people understand how much they might benefit from switching. As we’ve already shown in this guide for people on standard variable tariffs, the benefits can be substantial.
But sadly, many people simply have no idea how much they stand to gain by switching. In fact around 40% of people just don’t know (see below).
In this chart, we can see that for many people the expected savings of switching exceed what they would require to switch, while a large share of people simply don’t know.
In most cases it is very simple and much easier than it used to be. Assuming you don’t have any large outstanding debts to your current provider and are the person that pays the bills (not in a tenancy agreement), switching can take as little as 10 minutes to put in motion and a few weeks to complete.
Of course, before you commit to it you really should just get a quote. It only takes 5 minutes to do and understanding how much you might save makes it much easier to make a decision on whether you should switch or not.
As we showed earlier in this guide, you don’t necessarily need to switch to a small provider to take advantage of some of the cheap fixed rate deals on the market. Some Big Six suppliers offer competitive fixed rate deals, though according to uSwitch the majority very best deals still tend to come from smaller suppliers.
But price isn’t the only issue. Small energy suppliers consistently score better than the Big Six when it comes to customer satisfaction.
OVO in particular has a number of awards for their performance, two of the most important being:
If you are happy with your energy company, and confident in the service they provide and the price you pay for energy, then you should stay with them. Of course the data shows clearly that many people simply don’t realise how much better they could do on another tariff.
If you take 5 minutes to get a quick quote you’ll be much more informed as to whether you stand to benefit by switching, or whether you’re best staying put.
*Source and notes for graphs and table
Domestic electricity supply market shares
Source: Meter Point Administration Number (MPAN) data from Distribution Network Operators (DNOs)
Domestic gas supply market shares
Source: Gas supply point data provided by Xoserve
The rising price of loyalty to the Big Six
Source: Energylinx.co.uk, accessed 02/08/12 and every subsequent Thursday to the 12/02/2015, Data uses Ofgem standard consumption (profile 1) 2 for dual fuel users, averaged across all regions.
Variable tariff energy deals, Big Six and leading indipendants
Source: Tariff prices sourced from Uswitch Insight Portal, accessed on 11/9/15 and averaged across all regions. OVO supplier Energy indicates online discount and is for direct debit customers. Average Big Six SVT price is for direct debit customers but excludes paperless or online discounts. Estimated consumption of each house type based on Ofgem typical domestic consumption values 2015, low, medium and high users. (Profile Class 1 for electricity)
Fixed price energy deals, Big Six and leading independents
Source: Tariff prices sourced from uSwitch Insight Portal, accessed on 11/9/15 and averaged across all regions. OVO Better Energy includes online discount and is for direct debit customers. Average Big Six SVT price is for direct debit customers but excludes paperless or online discounts. Estimated consumption of each house type based on Ofgem typical domestic consumption values 2015, low, medium and high users. (Profile Class 1 for electricity).
Annual savings switching to OVO Better Energy
Source: Tariff prices sourced from uSwitch Insight Portal, accessed on 11/9/15 and averaged across all regions. OVO Better Energy includes online discount and is for direct debit customers. Average Big Six SVT price is for direct debit customers but excludes paperless or online discounts. Estimated consumption of each house type based on Ofgem typical domestic consumption values 2013, low, medium and high users. (Profile Class 1 for electricity).
Reasons for not switching supplier
Source: Ipsos MORI, Customer Engagement with the Energy Market - Tracking Survey 2013, p. 22
Main triggers for switching suppliers
Source: Ipsos MORI, Customer Engagement with the Energy Market - Tracking Survey 2013, p. 76 and 80
Necessary and expected savings from switching
Source: Ipsos MORI, Customer Engagement with the Energy Market - Tracking Survey 2013, p. 85
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Additional terms and conditions
Please see below for full terms and conditions on 33% renewable electricity, 3% interest rewards, exit fees and saving claims.
1Monthly cost - Representative monthly direct debit costs based on a non-economy-7, dual-fuel, medium user (3100 kWhs elec. and 12500 kWhs gas) paying in advance by direct debit, including online discount. All rates correct as of 23/08/16, but may go up or down.
2Weekly cost - Representative weekly costs based on a non-economy-7, dual-fuel, medium user (3100 kWhs elec. and 12500 kWhs gas). All rates correct as of 23/08/16, but may go up or down.
3Pay Monthly Savings are based on the average estimated annual costs for new PAYM OVO customers quoted through the OVO website (based on household and/or consumption information provided by those customers), compared to their current supplier and tariff. Comparisons taken between 01/01/2016 and 11/10/16. Incl VAT. Actual savings may vary according to your current supplier or tariff, individual tariff options, household information, consumption and location.
4Pay As You Go Savings are based on the average estimated annual costs for new PAYG OVO customers quoted through the OVO website (based on household and/or consumption information provided by those customers), compared to their current supplier and tariff. Comparisons taken between 01/01/2016 and 11/10/16. Incl VAT. Actual savings may vary according to your current supplier or tariff, individual tariff options, household information, consumption and location.
We include almost twice as much renewable electricity as the national average: At least 33% of electricity in all of our tariffs comes from renewable sources. The national average, according to Ofgem as at March 2014 was 16.7%. For more information please visit this page.
33% of your electricity comes from renewable sources: 33% renewable electricity as standard as of 1st April 2015. Renewable electricity is generated from wind, solar, geothermal, wave, tidal, hydro, biomass, landfill gas, sewage treatment plant gas and biogas.
3% interest: Calculated at 3% per year, paid monthly based on number of days in credit and the amount left in your account after you’ve paid your bill. OVO Interest Reward is capped at 12 times the amount of the current direct debit amount and is available to customers paying by advance direct debit. Terms apply: http://www.ovoenergy.com/terms/
95% of new customers save when switching to OVO: Based on all new customer signups between 01/02/2016 and 31/07/2016
94% of surveyed customers would recommend us: OVO conducted a survey of their customers in between 1st January 2016 and 15th April 2016. Out of 15,312 customers who responded, over 94% rated OVO 6+ when asked 'how likely would you be to recommend us to a friend and family, on a scale of 1 to 10.
Britain's top rated energy provider: Britain's top rated energy provider in the Which? 2015 satisfaction survey. Survey conducted in October 2015. Awarded in January 2016.