Will The Big Six Become The Small Six By 2020?

The Big Six may face a loss of a quarter of their customers by 2020 if they don’t improve customer service; will the big six become the small six by 2020? Where this will make room for other smaller suppliers with more competitive tariffs, consumers will still suffer as the average energy bill will be approx 20% higher. A recent report Citi on the changes in the energy market said

“Due to increasing competition we see the market share of the ‘Big 6’ in energy supply declining from 98% in 2013 to below 70% by 2020. When combined with declining  demand and lower margins the total profit pool available to the large energy suppliers could fall [by about] 40% from [about] £1.2bn in 2013 to just £700m.”

Reports like this are grim news for the main suppliers and their shareholders, but a huge inspiration for independent energy suppliers to continue as they are; offering cheaper tariffs. Historically, customer service, or rather the lack of, has been the bugbear of many consumers; energy suppliers didn’t care because they didn’t have to. But now with OFGEM fighting the consumer corner and smaller independent companies coming to the table with no previous reputations, will it force those remaining of the big six to be more conscientious toward their customers needs.

Citi (an American multinational banking and financial services corporation) noted that Centrica; gas and electricity provider under the British Gas label, reported earnings before interest and taxes of more than £600m from residential supply in 2012. They stated

“If the supply market does develop as the current trends suggest and the available profit pool declines by the estimated 40% we may well see some participants simply running their supply business to maximise cashflow in the short term and exit the market at some point,”.

Citi also believes that the the current 70% market share that the big six hold could be reduced to less than 50% in coming years because of the cuts in available renewable energy subsidies twinned with the closure of traditional energy plants. In the past year, the big six’s market share has fallen from 98% to 92% in the last year alone, thought to be partly driven by consumer anger about last autumns price rises.

Independent consultants Cornwall Energy produced figures that indicate customers hold 3.8m accounts with the smaller suppliers and 45.9m with the big six, it will be interesting to see how the balance tips in the coming years.

Energy Market Investigation

OFGEM Investigation in to the Energy Market

OFGEM, the Government Regulator for Great Britain’s Electricity and Gas markets have recently launched an investigation related to barriers of competition in the energy market under the backdrop of increased profits of the leading energy providers and sharply declining consumer confidence. Among the reasons for low consumer confidence is the common practice of energy providers to increase prices for customers who have not switched.

As OFGEM doesn’t have extensive enough powers to address the whole issue, it has referred this case to the Competition and Markets Authority (CMA) to make further investigations and establish a long term solution to help consumers regain confidence. This could mean that the “Big Six” energy suppliers could be split up to create a fairer market.

A month after the announcement, OFGEM started fining energy suppliers for mis-selling their services or for preventing customers from switching.

Recently, British Gas was ordered by OFGEM to pay a penalty and redress of £5.6 million for having blocked business customers from switching suppliers.

E.ON was issued with the most recent and at the same time highest penalty to date of £12 million which was for mis-selling to vulnerable customers which took place between June 2010 and December 2013. E.ON will pay £35 to 330,000 households that receive their “Warm Home Discount” and will write to another 465,000 customers to advise them how to complain if they believe they were treated unfairly. So look out for a letter from E.On if they supply your energy.

We believe this isn’t the last we’ve heard from OFGEM as more dubious practices get uncovered. In the meantime, consumers are advised to frequently switch energy providers to ensure they are not overpaying for the energy they are using.

Here at Switchwise, we are trying to make the switching process as easy as possible for you. We have an easy to use guide on our website on “How to Switch Energy Providers” or pop straight to our postcode checker so you can start comparing immediately.

Try it out now! Use estimates if you don’t have usage details to hand.

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Will the UK be the European leaders in solar photovoltaic installations?

Will the UK be the European leaders in solar photovoltaic installations?

According to NPD Solarbuzz, the UK could emerge as the biggest solar photovoltaic (electricity) market in Europe in 2014. This it the hopeful projection based on the large number that have already been installed and agreed installations for this year. If nothing else, the financial gain to be made from photovoltaic installations is incentive on it’s own.

This year alone the UK is predicted to install 2.875 GW of solar photovoltaic whereas Germany will only install 2.6 GW during the same period. In the UK, over 120 large megawatt projects recently gained planning permission, many of which will be realised in the latter part of 2014. In addition there are a large number of planning applications currently in the pipeline that are awaiting decisions.

Small solar photovoltaic installations also drive growth of the UK photovoltaic market, this is partly because the installations benefit from the government’s feed-in-tariff that is still comparably favourable at the moment, and that’s the good bit. Feed-in-tariffs benefit renewable energy installations in many ways. Firstly, you as an owner (or potential owner) of a solar photovoltaic system earn a fixed amount for every kilowatt hour of electricity you generate (generation tariff).

Every kilowatt hour of electricity that’s sold back to the grid earns you an additional fixed income (export tariff). If your equipment can’t generate enough electricity during peak times then you still can buy electricity from your energy supplier at their normal rates, but this will be significantly lower than what you paid them before.

The next feed-in-tariff cut will be in April 2015, so act now if you want to see a return on Energy.

Carbon Price Floor Freezes | Switchwise UK

The recent UK government decision to freeze the carbon price floor has been welcomed with open arms by householders that have said they will benefit from average savings on their energy bills of £15 a year. So what is the carbon price floor and why does it have such an impact on the industry and ultimately our energy bills?

The carbon floor price is a tax that companies and energy providers have to pay per tonne of CO2 for fuels used for generating power. This cost will then be passed on to us within our energy bills.

When it was introduced in 2012, companies had to pay £16 per tonne of CO2 emitted. The recent government decision will freeze the carbon floor price at £18 per tonne of CO2 between 2015 and 2020. The original plan of the government was to increase the carbon floor price to £30 by 2020. These savings will soon be passed on to households which is good news.

To save more money in the long run, you could invest the money you saved on buying energy saving products such as LED bulbs or energy efficient appliances. Even more money can be saved by switch energy providers, try Switchwise UK to save you even more on your next energy bill, Just enter your postcode on our homepage and start comparing.

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