After strong and extended negative media coverage, and statistics disclosing how almost 100% of UK customers are seeking to change energy supplier this year. Energy Switcheroo explores how the ‘big six’ energy suppliers are fighting back in the domestic energy supply market.
Why the Big Six energy companies need to address the imbalance
In October 2014, small suppliers stood in first to fifth position in most independent best buy leagues. As many as 3.8million households had accounts with the small suppliers, with the Big Six energy suppliers market share dropping from 98 per cent to 92 per cent in the last year alone
Something had to be done to rectify what seemed to be a losing market, especially after The Energy Watchdog launched an investigation into the energy sector amid allegations that these big companies were literally ripping off their long term customers. Even into 2015 statistics reveal a rise of almost 100% in the number of customers seeking to change energy supplier between January and March this year.
What is prompting a change from the Big Six energy companies?
The extreme weather conditions certainly increased everyone’s awareness of how much heating was costing. Customers could not see why they were paying more, when world energy prices appeared to have tumbled.
The Department of Energy and Climate Change launched a “Power to Switch” campaign, which certainly increased awareness.
How are the Big Six fighting back?
There has been a sharp increase in advertising by all energy companies, the larger concerns are now more aware that they cannot ignore the situation. These major six are starting to match the discounted offers from small energy suppliers. This challenge has affected the growth of the independent concerns, which while still significant, have slowed their rates of increase in the energy market share.
Why can the big six decrease their prices now, and not before?
The big six now have access the cheaper prices in the wholesale energy market. Previously they had to adjust their figures to compensate for having purchased energy at a time before last year’s slump. They are able to abandon the one year fixes previously used, and benefit from a substantial reduction in company obligation costs. They are also launching collective switching deals that are intended as market leaders. The big six still control around 92% of the UK’s energy supply market and therefore should be in a strong position to combat new tariffs from their competitors.
Position of the independents in 2015
Both major and independent companies that have not offered competitive one year fixes, are unlikely to have an increase in customers and may even see a drop in numbers, if switching becomes more competitive.
This year is going to see a battle between the independents; switching companies such as Energy Switcheroo are likely to be extremely busy. As using the help of sites such as Energy Switcheroo is the most popular method of switching, energy companies that rank high on switching sites, often see the highest rates of customer acquisition.