How small energy suppliers can compete with the Big Six

small energy suppliers

In October, news broke of Toto Energy’s collapse, just weeks after receiving an Ofgem warning. Toto failed to meet the 1st September deadline for renewable energy payments due from all suppliers according to Ofgem. It’s a shame to see it happen because of what smaller companies represent – a more competitive market that can only benefit consumers. 

Unfortunately, Toto is just one of 16 energy companies to collapse since the beginning of 2018. The competition from the Big Six is proving tough, but we don’t think it’s time for smaller energy suppliers to throw in the towel. There’s plenty more that can be done yet.

The rise of the small energy company

Before 2013, the Big Six energy companies controlled almost 100% of the UK’s market. This was until regulator Ofgem intervened, introducing simple, clearer, and fairer reforms to boost competition and give more energy companies a fair shot at success. It was the change the market needed.

Today, with over 70 energy company suppliers to choose from, the Big Six’s market share has fallen. Today it stands at around 75%. It’s a marvel to see smaller companies make such a huge impression, but the Big Six have pushed back.

What can small energy learn?

Competition in the market is good. It forces prices down to reasonable levels and ensures consumers have a wide enough variety of options to choose brands whose values they connect with. But it’s still a competition; you need to fight for your place. 

On the surface it can seem unfair; large energy companies have the money to invest in improving their services. Smaller companies are working their way up from nothing and have a lot less money to draw on. But that doesn’t mean they can’t offer something unique.

Big companies can come across as uncaring monoliths that don’t have the greatest customer service. Smaller energy suppliers can excel in this area as it isn’t necessarily an issue of funding. If you have a good team and the right approach, you can go a long way. Yes, people want the best deal, but they also want to feel the human approach.

Toto was under fire for a string of bad reviews. Learn from their mistakes and give the best service you can. Don’t spread yourself too thin – let your company grow naturally. 

Bigger companies can also be slower to implement the sort of change consumers want, like being more green. Smaller suppliers can move faster and implement green policies that match their customers’ expectations. They could even make a niche out of it.

Despite all this, it can still beg the question: in light of these collapses, can consumers trust small energy suppliers? With the right level of planning and organisation, there’s no reason not to trust them. And there are legal structures in place to help them. 

Legal requirements

Small energy companies aren’t obligated to meet the same legal requirements as larger ones if they don’t meet Energy Company Obligation (ECO3). The main policies of the scheme include focusing on making energy affordable, particularly to low-income households and making their services more energy efficient. This drives the quality of its service higher. 

But as large companies, there are more regulations in place, such as remaining Level 1 PCI DSS compliant and completing regular audits.

It doesn’t mean smaller companies should be lax in their approach. Organising themselves now will save them effort in the future. It doesn’t even have to be difficult; no piles of paperwork or hundreds of files. Much of what needs to be done can be done digitally. For a smaller company, a platform that keeps everything in one place is an easier way to stay organised.

So even though the Big Six aren’t going to collapse anytime soon, there is still space for smaller energy suppliers. If they can focus on offering security, reliability, and good service, they can make a big impression on the market. In general, smaller companies can implement new technologies a lot quicker than larger companies. This is due to the lack of a cumbersome legacy system that slows upgrades. A huge part of running a successful business is staying organised. If they can get that under control, they’re already in a much better position.

Inform People’s platform helps energy companies of all sizes ensure they’re keeping up to date with regulations, audits, and PCI DSS compliance. The platform helps you schedule and complete regular, essential, and one-off paperless audits to make sure your service stays on track and your customer’s information stays secure. For more information, take a look at what we do on our website.

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