It’s no secret that energy prices are all over the place. Comparing energy prices with any comparison site reveals that there can be a discrepancy as high as 40% between suppliers, which is madness when you realise that all energy is the same.
Martin Lewis of Money Saving Expert estimates that the majority of people in the UK overspend on energy by 30%. That equates to several hundred pounds with the average annual energy bill among households. The same figures can be applied to businesses but on a larger scale, since commercial energy demands are higher.
The 30% saving applies when a customer doesn’t switch their energy supplier and gets locked into an uncompetitive fixed tariff out of convenience; or, when they are moved onto the supplier’s standard rate which works out more expensive per kWh.
As Martin explains, the secret to getting a great deal is switching energy supplier after checking how much you pay for your energy against the prices of other energy suppliers.
However, customers are often reluctant to switch even when they are offered a deal that’s significantly cheaper than their current one. The main reason? Because they don’t recognise the name of the supplier, or because the firm is small.
Can you trust small firms?
The so-called ‘big six’ control the majority of the energy market. British Gas, EDF, E.ON, Npower, Scottish Power and SSE are the brands most people choose because they are well-established and (for the most part) trusted.
Smaller energy firms enjoy no such brand recognition; however, they are still licensed to supply electricity and gas by Ofgem.
The nature of the internet also means smaller suppliers cannot hide from disgruntled customers. Their lower customer numbers means bad reviews impact their overall review ratings on TrustPilot more. Therefore, any smaller firm with an excellent overall score with reviewers should be respected. They can be trusted.
What are the benefits of switching to a small firm?
Smaller energy firms are incentivised to offer cheaper energy deals than the big six because they need to penetrate the market to survive.
If you do a price comparison right now, we will wager that the best deals you see are from smaller energy suppliers. Some you may not have heard of, and this will probably be enough to put you off and stop you switching your energy supplier.
This is a mistake.
One of the secrets of getting a great deal on energy is picking from any of the so-called ‘smaller’ energy firms out there (this basically means any energy firm that isn’t one of the big 6 or a large independent like Shell Energy).
Smaller energy firms can offer 10%, 20% or even 30% lower introductory prices than the big six, and the renewal rates remain competitive too.
Another boon to choosing small firms is the customer service is usually far better. A quick look at the reviews for suppliers like ESB Energy, Bulb Energy and Octopus Energy reveals they are extremely well regarded among customers.
This is the result of not scaling too quickly — customer numbers are controlled in line with investment in customer service, allowing smaller energy suppliers to meet targets and offer a higher standard of customer care than bigger suppliers.
How can I maximise my energy savings?
As a business, the first thing you should do is compare energy rates for businesses. Often, they can work out to be slightly cheaper per kWh versus domestic energy plans, so the two are not necessarily a good reflection of each other.
Secondly, you should do away with any negative preconceptions you have about smaller energy firms.
Smaller firms are regulated by Ofgem just the same as bigger suppliers, and they are incentivised by their own survival to offer lower energy prices and deliver an outstanding customer experience. Bigger suppliers can also offer low prices, but they can get away with larger numbers of dissatisfied customers because of their brand.
Savings of up to 30% are possible by switching energy supplier. Martin Lewis is one of the foremost experts on money saving, and he recommends switching to smaller suppliers in his Money Saving Expert guide as one way to realise savings on your energy bills.
The trick is to look at the reviews – this will go some way to providing assurance that you can trust the smaller suppliers you haven’t heard of.