Is leaving the big six energy companies worth the risk?
Small energy companies have been going bust all year — is it safe to leave the big firms?
On Monday, One Select joined a queue of smaller energy providers that went bust this year. It left 36,000 customers without a stable energy tariff.
This means that half-a-million homes have now been affected by the number of small firms ceasing to trade since November 2016 — according to figures from Ofgem.
However, increasing numbers of homes are continuing to opt for smaller providers as opposed to sticking with the six largest companies in the UK. Almost five million customers have switched away from the big firms to smaller suppliers in 2018 alone.
There are currently over 70 every firms to choose from when picking your supplier. Newcomers to the industry often stand out as they can offer the best deals compared to more established suppliers.
This is typically because they have lower running costs and don’t have to pay towards the expensive government schemes that hit larger organisations.
Keep in mind when searching for a policy though that small firms are unable to purchase as much energy in advance as larger suppliers. This means that smaller energy firms are much more vulnerable to sudden price hikes in wholesale prices, and this has a knock-on influence on your bills.
Many experts say that this means eventually lots of smaller firms could cease trading just because of the gradually rising cost of wholesale goods.
Yet for many customers, the risk of their provider collapsing is still well worth the savings they make by choosing them over a larger firm.
It might be time to listen to the experts though, and at least consider switching your tariff to a big six firm in order to get yourself more security.
You can however use the Ofgem website to do a check on any firm you’re considering (large or small) and see how stable they are.
Use a price comparison website like A Spokesman Said to read up on the best energy deals and double check you’re on the best tariff, and with a company that is stable.
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