UK’s biggest energy suppliers losing more customers to start-ups
4th September 2018 | Residential Energy
The latest threat to the dominance of Britain’s six biggest energy suppliers is coming from small technology companies that automatically switch consumers to the cheapest deal. Their emergence couldn’t come at a worse time for the industry, which is already beset by lawmakers capping rates and suffering from perennial mistrust by consumers. On top of that, utilities are getting squeezed by surging wholesale natural gas and power prices.
A record 5.5 million customers switched electricity supplier last year. So far, price comparison websites have provided the easiest way for consumers to compare different tariffs. But now, companies like Labrador Ltd and Look After My Bills Ltd have taken it a step further. They move clients to the best tariff automatically.
Biggest Energy Suppliers
“What we do is put pressure on the big suppliers to be competitive,” Labrador’s Chief Executive Officer and founder Jane Lucy said in an interview. “The real challenge we have is consumer disengagement – to get people to set aside three minutes to sign up is still our hurdle.”
A recent investigation into the energy markets by the Competition and Markets Authority found that 70 percent of customers of the “Big Six” were on the most expensive default tariff and could save £300 a year by switching. The findings led Prime Minister Theresa May to introduce a price cap on those contracts, starting by the end of the year.
The utilities are responding to the tougher trading environment after seeing their combined share of the electricity market drop to 78 percent in the first quarter from 10 percent seven years ago.
SSE Plc, the nation’s second-biggest supplier, got approval on Thursday to merge its retail arm with Innogy SE’s Npower to create the nation’s second biggest power and gas distributor. The Scotland-based company has seen its customers drop to 14 percent of the total from 20 percent in 2011.
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