* Hundreds of thousands switch to small suppliers
* "Big Six" market share drops below 95 pct
* Winners include First Utility, Ovo Energy
* Politics loom large over UK energy sector
* SSE to split wholesale and retail divisions
LONDON, March 26 (Reuters) - Riding a wave of public anger at soaring utility bills, a group of tiny British suppliers have prised away hundreds of thousands of customers from the energy giants which dominate the gas and power market, a Reuters analysis of company data showed.
In a modest but potentially significant challenge to the dominance of the "Big Six" energy suppliers, half a million customers - or two percent of British households - have opened accounts with smaller suppliers since November, the data showed.
The Big Six - SSE, Scottish Power, Centrica , RWE npower, E.ON and EDF Energy - are under intense political scrutiny before a parliamentary election next year.
These suppliers raised gas and electricity tariffs by up to 11 percent in the past winter before passing on tax savings, and could soon face an anti-trust investigation into their pricing.
Blaming a jump in wholesale costs plus the taxes and social charges, they deny accusations by the opposition Labour party that they are gouging customers and say they have been unfairly cast as the villains in a debate over how rising prices for everything from gas to water have eroded living standards.
Many customers remain with their energy company through inertia but growing numbers now want a better deal. "I have stayed with the same supplier all my married life, for 56 years. But I just had a huge gas bill and for the first time I am thinking I ought to look into switching supplier," said Margaret Nelson, a 74-year-old pensioner.
Overall account numbers are rising due to a growing population - about 140,000 new British homes were completed in the government's 2012-13 financial year. However, the young suppliers are expanding largely through switching.
The main winners are companies such as First Utility, Ovo Energy and Utility Warehouse, which is owned by Telecom Plus . These independents, which buy energy on the same wholesale markets as their big rivals, have also raised their tariffs. However, they are attracting business by promising to keep prices down through more efficient administration and by offering better customer service.
The big companies still dominate the market and millions more customers would need to switch to undermine their position. Nevertheless, their market share has dropped from 98 percent at the end of 2012 to below 95 percent for the first time since the British energy market was liberalised 15 years ago.
"These customer switching numbers are just a drop in the ocean but it's a step in the right direction," said Audrey Gallacher, director of energy at UK consumer lobby group Consumer Futures.
Although British energy prices are in line with the EU average, three regulators will decide this week whether to refer the sector to the Competition and Markets Authority. Such an investigation could take up to 18 months with possible punishments ranging from increasing pricing transparency to breaking up companies.
Secretary of State for Energy Ed Davey called on the regulators last month to consider breaking up energy companies which are found to be abusing monopoly positions.
SSE, Britain's second-biggest electricity supplier, said on Wednesday it would split its wholesale and retail divisions, as well as freezing prices.
Profits at Centrica, the owner of the largest energy supplier British Gas, were partly hit by the loss of 362,000 accounts last year. SSE lost 250,000 accounts in the nine months to December 2013, its latest results showed.
According to data provided by industry lobby group EnergyUK and the companies, the amount of users signing up with independent suppliers has risen more quickly than ever.
Two of the Big Six, Scottish Power and EDF, have also taken customers away from their peers but the percentage of those switching to independent providers is at a record high.
One of the biggest winners has been First Utility, set up in 2008 by a former telecoms executive. It signed up 135,000 new customers in 2013, a year-on-year rise of 75 percent, and is now one of the biggest independent providers.
"Fundamentally, people switch because of price. Then it's about how we engage with the customer going forward," First Utility founder Darren Braham told Reuters.
First Utility currently has one of the cheapest combined gas and electricity deals on the market, an offer it says is possible because it has lower administrative costs than the Big Six.
The firm, based in the historic town of Warwick 130 km (80 miles) northwest of London, has more than trebled its call centre staff since October as new customers rushed to sign up after many of the big suppliers raised tariffs.
Ovo Energy, founded by a former J.P. Morgan corporate bond trader, has also gained substantial customer numbers, partly thanks to an advertising campaign featuring slogans such as "Feel loved again", "OVO customers do it with the light on" and "OVO turns you on".
NO EASY ESCAPE ROUTE
Stephen Fitzpatrick, who founded Ovo in 2009, used a parliamentary grilling of energy bosses last October to deliver a marketing pitch for the company which he once ran from his kitchen table. Since the start of the year, Ovo has signed up nearly 100,000 new customers, and the total exceeded 250,000 this week.
Britain's biggest independent, Utility Warehouse, directly supplies 836,000 power and gas accounts after buying RWE npower's Electricity Plus and Gas Plus subsidiaries in November. Other small suppliers that have signed up new customers include Good Energy and Co-op Energy.
Labour leader Ed Miliband promised last September to freeze energy bills for 20 months if he wins the 2015 election, wiping 2.7 billion pounds ($4.5 billion) off the market value of the two London-listed energy suppliers, Centrica and SSE, in a day.
Energy bosses accuse politicians of pursuing muddled policies but risk a repeat of a levy that Labour slapped on the "excessive profits" of utilities last time it came to power in 1997.
"Until the next general election, the Big Six face an unenviable political position," said Investec equity analyst Harold Hutchison. "It will be very hard for them to maintain their profitability without simply increasing the risks of future windfall taxes. It is a 'lose-lose' situation, with no easy escape route." ($1 = 0.6059 British Pounds) (Additional reporting by Lavinia De Luca; editing by Guy Faulconbridge, Kate Holton and David Stamp)