Are Independent Suppliers Cheaper Than Bigger Energy Suppliers?

Image of Independent Suppliers

People often ask which energy supplier is cheaper, an independent energy supplier or a bigger energy supplier. This is a common question, but unfortunately, there is no definite answer due to a variety of factors, such as the wholesale energy prices. When it comes to switching your business energy, there are a few trends in the industry that you can look out for in order to find better business energy deals. This applies to both independent suppliers and bigger suppliers.

To help you understand how energy suppliers buy their energy and the cost benefits of both types here are some more information.

 

How Bigger Energy Suppliers Buy Energy 

The bigger energy suppliers buy their energy supply in bulk a year or two in advance, whereas, independent suppliers buy their energy supplies much closer to the time when they will be selling it. Effectively, this means that the bigger suppliers are often in a ‘price freeze’ which can benefit customers at certain times. For example, when the cost of wholesale energy rises, the bigger suppliers will be able to sell energy for cheaper because they were able to buy the energy at a lower rate at that time. However, this can also have an opposite effect if the wholesale energy price becomes cheaper and the supplier had bought the energy at a higher rate previously. Although they may not always do this, it does mean that they can offer impressive energy deals if the market is looking unfavourable.

 

How Independent Suppliers Buy Energy

Smaller energy suppliers can be more reactive and flexible when it comes to movements in the wholesale energy price. The smaller suppliers buy their energy closer to when they will need to sell it, however, a fluctuating wholesale price will be reflected in their energy deals. Once the wholesale price increases, they will have to spend more to buy the same amount of energy. However, once the price decreases, they can spend less to buy the same amount of energy. Ultimately, independent suppliers can be cheaper or more expensive than bigger suppliers depending on the wholesale price.

 

Benefits of Bigger Energy Suppliers

These bigger energy suppliers have been in the market for much longer than independent suppliers, which has allowed them to become more established. Going to a major energy supplier provides a wide range of benefits.

Discounts – By law, the big suppliers must offer the ‘Warm House Discount’. This means that if you are applicable for this discount, you could see savings of up to £140 for the coming winter. However, smaller companies are not required by law to offer this discount.

Payment Methods – Bigger suppliers are able to accept payment in arrears and offer various payment options, so you are not limited to just direct debit. The bigger suppliers may be able to offer payment options such as prepayment meters, cash, or even a cheque.

 

Benefits of Independent Energy Suppliers

Many people in the UK have never switched their energy supplier, even though they could be getting a better energy deal. Most UK households decide to stay with the bigger energy suppliers due to many reasons, but they should also consider an independent energy supplier as they do provide their own range of benefits.

Competitive Rates – Generally, the smaller energy suppliers can offer great business energy plans. The government aims to make the energy market more competitive by exempting independent companies from the ‘Energy Company Obligation’. This government support allows the smaller suppliers to make savings, which are then passed onto the customers.

Contingency – Many people are often wary about smaller companies going out of business and often decide against independent suppliers because of this. However, you are actually very well-protected thanks to Ofgem, the government regulator for the energy market. If an independent supplier goes under, Ofgem will move you into a new supplier immediately, without needing you to do anything. You then have the choice of staying with the new supplier, changing the tariff, or moving to a different supplier.

 

Compare Business Energy Online

If you’re looking for a new business energy deal or simply want to compare business energy plans online, then please fill out the business energy comparison form and leave it to our saving experts to find the most favourable deal for your business. In the meantime, if you have any questions or if you are unsure of what you are looking for, then please don’t hesitate to contact us.

Call us on 02476 997 901 or you can email us at quote@comparenergyonline.co.uk.

 

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