End of the 'Big Six' Energy Suppliers as the rise of challengers’ force Ofgem reclassification
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- Nov 25, 2020 12:44 pm GMTNov 25, 2020 9:30 am GMT
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The days of the 'Big Six' energy suppliers will soon be at an end after Ofgem announced that is to reclassify energy suppliers as challenger companies continue to snap up market share.
Big Six is over
Challenger energy suppliers such as Octopus Energy, Bulb and OvO have upturned the established order of things since they entered the market after introducing new tariffs, technology and customer service tools.
New technologies and software such as Dyball’s CRM software has made it cheaper and easier for new market entrants to compete with the big players on customer service, tariff offerings and flexibility.
More competition has also played its part with the most recent energy switching data showing that more consumers are moving away from the ‘Big Six’ to smaller challenger energy suppliers than ever before.
Increasing numbers of acquisitions have also made defining the Big Six trickier to identify as deals such as OvO’s £500 million purchase of SSEs household division saw the supplier leap into the big leagues.
As such, Ofgem will be relabelling energy suppliers in its industry data and have decided to ditch the term ‘Big Six’ with the more encompassing ‘Large’. With more challenger suppliers rapidly growing in size this is a better way of describing the point at which a particular supplier is at.
End of an Era
Centrica (British Gas), E.ON, SSE, N-Power, EDF Energy and Scottish Power will have their Big Six titles removed as the industry moves into a new, much more competitive phase.
The time when just six major energy suppliers controlled 98% of the UK’s market share are long over, with smaller companies now snapping up larger customer bases.
Under the new classification system, all energy suppliers with 5% or more market share will now be classed as a ‘Large’ supplier whilst those with below will fall into ‘Medium’ and ‘Small’ categories, respectively.
Energy suppliers such as Utilita and Shell UK’s domestic energy supply company fall into the medium-size category whilst new market entrants will be entered into the small category.
“The new classification based on market share is designed to make ‘indicators more robust and suitable to analyse the evolving retail market structure,” Ofgem said in a letter to industry bosses."