SSE and npower WILL merge to create a giant energy company – but what does this mean for customers?
Experts warn that knocking the Big Six energy suppliers down to the Big Five in the UK is bad news for households
ENERGY supplier SSE and the owner of npower have today confirmed that they will be merging to form a new UK gas and electricity company.
But experts are warning that it’s far from good news for consumers who could see the price of energy rise as a result.
The new energy company would bring the Big Six down to five and experts are warning that less competition in the market could see the price of energy go up.
SSE, which used to be known as Scottish and Southern Energy, supplies energy to 7.77 million households while npower serves 4.8 million.
If the plans go ahead - they still need to be approved by competition and regulatory bodies - then the new company would be the second biggest energy supplier with 22 per cent of all UK gas and electricity customers.
British Gas would still be the biggest with 27 per cent of all UK customers.
Alex Neill from consumer title Which? says that when big players like these merge, it’s “rarely a good thing for consumers” thanks to less competition in the market.
He said: “As both businesses struggle on customer service, coming in the bottom half of our satisfaction survey, the competition authorities must take a hard look before allowing any venture to go ahead.”
Claire Osborne, energy expert at uSwitch.com warns regulators will need to be satisfied the deal is in the “best interest of consumers”.
She added: “Whether it’s the Big Six or the Big Five, customers have plenty of choice in the energy market with over 60 energy companies actively competing on both price and service.”
Experts at market analyst at ETX Capital are also concerned about the drop in competition but reckons it’s “hard to see how” the regulators will let the deal go ahead.
Both uSwitch and Which? advise that customers don’t wait to see what plays out but should take the steps to switch supplier now.
We regularly report on how you can save hundred of pounds a year by switching energy company but people are often put off by the hassle.
How to save hundred of pounds by switch energy suppliers
DON'T be put off switching energy suppliers because you can't be bothered because you could be getting a much better deal if you went elsewhere. Here's how to do it:
1. Shop around - If you're on a standard variable tariff deal you are throwing Away up to £300 a year. Use a comparion site like MoneySuperMarket.com or EnergyHelpline.com to see the best deals that are available to you.
The cheapest deals are usually found online and are fixed deals - meaning you'll pay a fixed amount often for 12 months.
2. Switch - When you've found one, all you have to do is contact the new supplier.
It helps to have the following information - which you can find on your bill - to hand to give the new supplier.
- Your postcode
- Name of your existing supplier
- Name of your existing deal and how much you pay
- An up-to-date meter reading
It will then notify your current supplier and begin the switch.
It should take no longer than three weeks to complete the switch and your supply won't be interrupted in that time.
According to uSwitch, the average tariff from the Big Six is now £326 more expensive than the best deal on the market.
The new company is expected to serve 11.5 million customers, but it's not yet clear how it will affect existing customers of either energy firm.
Centrica, Iberdrola (ScottishPower), E.On and EDF make up the rest of the Big Six, all of who have also come under pressure from smaller rivals who have been taking customers and market share.
npower owner innogy SE reported a half-year loss for npower in August as it grappled with what it called "fierce competition and political pressure".
GAS GUZZLERS Are you due back up to £103 from your energy supplier? Here’s how to claim…
In July, SSE revealed it lost another 230,000 customer accounts as a result of households switching away from the Big Six to cheaper rivals as it blamed a "highly competitive" market.
If the new company gets the go ahead, it would be listed and SSE would "demerge its shares to its shareholders".
In a statement, Peter Terium from npower owners innogy SE, put the merger down to the “competitive landscape” and “the uncertain political environment for energy retailers”.
The government announced last month that it will impose a price cap on poor-value energy tariffs.
The SSE said that it is "mindful of the requirements of customers and the concerns of employees" but failed to be specific about the impact it will have.
SSE today also announced a £65.1million contribution to customers.
This might seem like a lot of money but it really translates to a small reduction in bills.
In March, the National Grid announced a similar incentive, by saying it would not claim £480million from consumers in network charges.
Ofgem said that this was a step in the right direction and called for other network companies to take similar steps.
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