Domination of Energy Market Ending for Big Six?

Energy Secretary Chris Huhne will today chair a meeting of smaller energy suppliers in an effort to introduce new competition into the energy market and end the current domination of the Big Six energy suppliers.

Energy CompaniesThey’re known as the ‘Big Six’ energy suppliers – British Gas, npower, E.ON, EDF, Scottish Power and Scottish & Southern. Together, they generate 80% of the UK’s electricity and supply 99% of electricity requirements.

Now, with rising energy prices looming on the horizon, Energy Secretary Chris Huhne is looking to disrupt what he has described as their “cosy” relationship by helping smaller suppliers to compete in the UK energy market – a move that’s aimed at putting pressure on energy companies to reduce household bills.

“It is madness that 99% of people get energy from the Big Six,” said Mr Huhne.

The smaller suppliers that Mr Huhne is referring to comprise about a dozen energy companies with under 100,000 customers each. These include Ovo Energy, First Utility, Good Energy and Utilita.

Competing with the Big Six energy companies

But smaller companies face a number of problems when trying to compete with the Big Six. Because they supply fewer people, the companies require smaller amounts of energy – but they’re concerned that they can’t buy small blocks of electricity they need on the longer-term contracts that provide them with the best prices.

Another problem for the smaller companies is growth. When any of them reaches more than 150,000 dual fuel customers, they are immediately subject to a host of expensive green energy obligations, hitting their bottom line and making growth less attractive.

Energy regulator Ofgem is stepping in as well to increase competition by making the Big Six auction off up to 20% of the electricity they generate. However, Darren Braham, managing director of First Utility said that this amount would not make enough of a difference to smaller suppliers.

Moneyhighstreet comments: “Increased competition is good news for consumers, but it’s going to take time to filter though and may not put enough pressure on the Big Six in the short term to get individual companies to hold off on price rises.

“In the meantime, consumers should continue to compare prices online to find the best energy tariff for their needs. As prices rise, however, it’s also important to adopt other energy-saving methods around your home, such as improving insulation, using low-energy lightbulbs and making sure household appliances are only on when they need to be.”

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