Energy
Citigroup: ‘big six’ to lose a quarter of customers by 2020
Research by Citigroup investment bank has suggested that the UK’s largest energy suppliers may lose up to a quarter of their customers and see a £500 million per year loss of collective profits, because of increasing competition from small energy suppliers.
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The group said that growth of smaller competitorsm and also Ed Miliband’s pledge to freeze energy prices, are factors that can drive the loss of a quarter of the big six’s customers and a subsequent profit drop.
The report, UK Energy Policy – Unwinding the Big 6, says, “Due to increasing competition we see the market share of the ‘Big 6’ in energy supply declining from 98% in 2013 to below 70% by 2020.
“When combined with declining demand and lower margins the total profit pool available to the large energy suppliers could fall [by about] 40% from [about] £1.2bn in 2013 to just £700m.”
The report adds that consumers will still face high energy bills, as the average dual-fuel bill would be around 20% higher by 2020 because of inflation, rising infrastructure costs and the effects of green policies.
The ‘big six’ – Centrica, SSE, ScottishPower, EDF, npower and E.ON – have come under increased scrutiny from both consumer groups and politicians over the past year as rising energy bills and customer dissatisfaction caused a record number of consumer to complain and move towards smaller energy suppliers.
Complaints to the big suppliers reached a peak of 1.7 million in just three months in June, with renewable energy suppliers such as Ecotricity and Good Energy both seeing their satisfied customer base expanding.
The big six companies were recently told to give back £153 million to customers, money that was left in closed accounts after they switched supplier.
Photo: Nayu Kim via Flickr
Further reading:
Npower tops energy customer complaints table
‘Unprecedented’ growth forces small energy suppliers to battle customer service issues
Unhappy ‘big six’ customers flock to Good Energy, whose profits see sharp rise
Ofgem calls for wide-ranging competition inquiry into energy market