What do the energy suppliers actually do?

It is a well known fact that the gas and electricity markets in the UK are dominated by the ‘Big 6’:, in order of size, British Gas, Npower, SSE, Scottish Power, E.On and EDF. Between them they control 95% of the UK’s market share. Without getting into too much detail about who are they and the rights and wrongs of a controlled market, let’s look at what they do. For the purposes of this article we will refer to electricity because pretty much every house in the UK is connected to the electricity grid but many are not connected to the gas grid.

The people we pay our bills to are energy distributors. This should not be mixed up with ‘District Network Operators’. The DNOs are the owners of the various parts of the grid but not necessarily the people you pay your bill to. Confusingly, the DNOs often act as energy distributors as well. So if you are in the Central Belt of Scotland, your DNO will be SSE. However, your energy distributor may be any one of the above.

If you have changed electricity supplier recently you will have noticed that no bulldozers came and ripped up your drive to lay new gas pipes or cables. This is because it all comes from the same place. SSE and British Gas do not have rival cables in the ground to connect your house up to! The most important thing then to understand is that the energy ‘suppliers’ do not actually supply you with anything. It is simply an administrative exercise. The DNOs control the network; you take in the electricity; the meter tells everyone how much: the DNO bills the energy supplier and the energy supplier bills you (with a mark-up, of course!)

So there you have it: what do they do? Not much really. Next blog will be looking at how to beat them!

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