In 1989 the UK passed the Electricity Act. With it the State owned and managed energy sector was broken up and privatised. Across the 1990’s six energy companies emerged to take control of the market. These were British Gas, EDF Energy, PowerGen (now E.ON), Innogy (now Npower), Scottish Power and SSE (recently acquired by OVO). Although some names and ownerships have changed, these six companies still exist through to today.
When it came to gas and electricity supply, this big six dominated the market from the early days and still do today. In fact, until 2004 all of the UK gas and electrical supplies came from just these six. The biggest threat to the status quo came in 2019 when OVO bought SSE. However, although under new management, SSE still exists as its own separate supplier under the OVO umbrella.
Who are they?
- British Gas. Having the major advantage of emerging directly from the state-run energy supplier, British Gas was and has remained by far the biggest supplier to the UK. It started life purely as a gas supplier but moved to also provide electricity with the 1989 Government Act. It was bought out by Centrica in 1997 and can today boast around 11 million customers.
- EDF Energy. Home to 6 million customers, this French State controlled company has been the largest energy provider in the UK since 2009. This is when it bought out British Energy, and with it a large nuclear generation infrastructure.
- E.ON. Until 2007 E.ON was known as PowerGen. This is when it was decided that the name should be changed by its German owner which had bought the company in 2002. Today E.ON supplies around 7 million customers.
- Npower. Another company which has changed its name over time. In 2002 Innogy PLC became Npower after being bought into German ownership. Its market share stands at around 5 million customers.
- Scottish Power. Formed in 1990 and now has 5 million customers. Although it has not changed its name, a Spanish energy firm took control of Scottish Power in 2006.
- SSE. With 9 million customers this company has held a strong position on this list. However, it has recently been taken over by OVO. This has shaken the market and although SSE branding still exists, this was a huge shake up for the big six. If the OVO brand covers SSE, it would see the new company rise to number 2 on this list.
Do the big six still dominate the market?
Today there are around 56 energy suppliers in the UK. Between them they hold 28% of energy customers. This shows that the big six are very much still in control of the market. Despite a number of measures that have been introduced to improve competition, households are still reluctant to switch away from the big six suppliers. Although trends do suggest that this is changing year on year, so the future looks bright for the rest of the competition.
Stability of the Big Six Energy Suppliers
Although the roots put down in the 1990’s still exist, most of these companies are almost unrecognisable from when they started. OVO in buying SSE has made huge waves in the energy industry and could pave the way for similar moves by other suppliers.
Ownership and branding will change as the years pass on but the big six will still exist in some form.
Is having a Big Six good for the UK market?
Over the years the big six have come under scrutiny for a number of reasons. In any market, having a few companies at the top is never going to help competition. By getting a bigger market share, the smaller companies have been able to innovate to make things better for consumers. Green only suppliers have started to operate successfully, for example, something which would have been much more difficult previously.
Why does the Big Six still dominate the market?
This is a question that OFGEM is trying to answer and do something about. Essentially a lot of the reason comes down to trust. These companies have been operating for a long time and people trust the brands.
Newspapers and media outlets are often producing headlines of failing or failed energy companies. This can hold consumers back from trusting a smaller supplier. OFGEM have combatted this by ensuring that nobody will ever lose gas or electricity because of a supplier’s collapse.
Advertising can also help bigger companies keep the smaller competitors down. With a bigger budget comes bigger brand awareness.
Reluctance to switch. This will lead to many customers simply rolling over to a variable tariff or accepting whatever offer of a new deal the existing company offers. This is not likely to be the best way to search for a deal but has helped the big six maintain a high market share.