Business Energy Competition Increasing

Non-domestic competition “on the way up” according to Energy UK

According to Energy UK, the trade body that represents many of the UK’s largest energy suppliers, competition in the non-domestic energy sector is “on the way up”.

Energy UK proudly stated:

“Nearly 30 companies are actively working to supply gas and electricity to the energy business markets.”

However this hides a major discrepancy in the underlying numbers.

Whilst the volume of gas provided by non-Big 6 suppliers is as high as 80% this is a figure skewed by the existence of niche gas suppliers, focussing on very large gas supplies. Taking a pure customer number view presents a very different picture of the continued dominance of the Big 6 energy companies in the business energy market.

Indeed, even under a volume measure, the Big 6 dominates the electricity market with 80% of business energy still supplied by the likes of BGB (British Gas Business), SSE (Scottish and Southern Energy) and EDF.

Angela Knight, Chief Executive of Energy UK said:

“The energy industry has become even more competitive, open and transparent in recent times. More companies than ever are claiming their stake – vying for customer business. Independent suppliers have seen a large increase in customers from the business community and are now supplying almost 80 per cent of gas and 20 per cent of electricity to them. These results are a clear indication that competition is working and thriving.”

We cannot agree, yes it is true that the very largest gas users are finding better product fit outside of the Big 6 but the customer numbers don’t back this up as a genuine shift in competitive focus to smaller suppliers.

Although gas, volumetrically, has something to shout about, for business electricity customers the situation is worse on all levels.

The electricity market remains characterised by large, incumbent suppliers, doing very little to promote better value deals for their business energy customers and instead using customers’ apathy to trap them onto uncompetitive contracts.

It is to be hoped that the 2014 ending of ‘rollover’ contracts amongst the Big 6 business energy suppliers will prompt customers to take a more active role in the energy market in order to secure themselves a better deal.

Therefore, until the customer numbers justify the claims, we will remain somewhat guarded as to the proclamations of the advent of genuine competition for businesses of any shape, size, age or financial position. In our opinion there’s still a lot of work to do before such self congratulatory messages as we see here are justified.