November 29, 2019 / 1:08 PM / 8 days ago

Explainer: Britain's Big Six energy suppliers to shrink to five

LONDON (Reuters) - Britain’s six biggest retail energy suppliers, known as the Big Six, are about to become five with the restructuring of Npower by its German owner E.ON (EONGn.DE).

FILE PHOTO: A sign hangs outside the building of electricity provider npower in Solihull, Britain, March 7, 2016. REUTERS/Darren Staples/File Photo

Below are details about the market and factors driving change:

WHO ARE THE BIG SIX?

Alongside Npower, the Big Six, which control about 70% of Britain’s retail energy market, are Centrica’s British Gas (CNA.L), SSE (SSE.L), EDF Energy (EDF.PA), Iberdrola’s Scottish Power < IBE.MC> and another E.ON-owned supplier operating under the E.ON brand.

British Gas dominates with about 24 million customers.

WHAT IS CHANGING AMONG THE MAIN SUPPLIERS?

E.ON said on Friday it planned to break up Npower under a 500 million pound ($642 million) restructuring, which a union said could put up to 4,500 jobs at risk. Npower’s customers are expected to migrate to the E.ON branded business.

Relative newcomer OVO Energy will become one of the main suppliers with its deal buy the retail arm of SSE. The acquisition is being examined by the competition regulator. Both firms expect it to be completed in early 2020.

SSE had sought a buyer after a plan to merge with Npower collapsed because the two sides could not agree commercial terms following the government’s move to cap energy bills.

WHO COMPETES WITH THE BIG SIX?

Smaller, nimbler rivals have been challenging the Big Six, relying on lower overheads to offer households cheaper supplies of electricity and gas.

There are more than 50 of these smaller suppliers, even after many start-ups shut in recent years. Some operate nationwide, while others offer regional services.

The challengers, which include Bulb and Octopus Energy, have grown rapidly and control about 30% of the market, up from 1% a decade ago.

WHY WAS A PRICE CAP IMPOSED?

The regulator Ofgem imposed a price cap on standard energy bills at the start of 2019 under a policy introduced by former Prime Minister Theresa May, who had described prices being offered consumers as a “rip off”.

The initiative capped the most widely used tariffs. It was set below the level charged by the Big Six on the bulk of their supplies.

In August, Ofgem said the cap would be 1,179 pounds ($1,430) a year for average energy use, 6% below a previous level set in April, reflecting a fall in wholesale energy prices.

COULD BRITAIN’S ELECTION BRING MORE CHANGE?

Britain’s opposition Labour Party, which is trailing in the opinion polls, has promised to bring the Big Six into public ownership if it wins the Dec. 12 parliamentary election.

Reporting by Susanna Twidale; Editing by Edmund Blair

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