It's been confirmed that energy providers SSE and npower are to merge to create a single, major energy company. It means that the Big Six will now become the Big Five, but what does this mean for customers?
The merger is still subject to regulatory approval, and if granted, is expected to complete towards the end of next year or the beginning of 2019. At that time, it will create one of the biggest energy providers in the UK, with SSE's chief executive Alistair Phillips-Davies saying that the merger "will ultimately better serve customers" through greater efficiency and innovation.
However, there's no word yet on what that actually means, nor what the eventual energy tariffs will be like, so for now, it's a case of wait and see. Both firms say that it's business as usual and that their operations will remain entirely independent until the merger completes, so current customers may have to wait to hear more from their suppliers to know what happens next.
Unfortunately, even though the companies themselves say that the merger will benefit customers, industry insiders aren't quite so sure. Many argue that it will do nothing more than reduce competition – after all, fewer players means fewer options for consumers – and given that many customers remain loyal to their energy providers and don't consider switching, they could easily lose out.
If anything, the announcement serves to highlight the importance of shopping around for your energy supplier, particularly now that there are more smaller providers than ever to consider. The Big Six (soon-to-be Big Five) rarely boast the cheapest tariffs and they also rarely top the charts in terms of customer service, so it could be worth looking to lesser-known names to reduce your bills, particularly if you want to go green.
Being able to cut your bills down to size becomes even more important when you consider how much spending on utilities has ramped up in recent years. Research from Tilney shows that the cost of utilities has risen at almost triple the typical household's rate of inflation in the last 20 years, which could be seriously taking its toll on your budget.
Indeed, their calculations show that the typical household has seen its spending on general goods and services rise by 50.7% from 1997 to the end of 2016, while for utilities, the cost has skyrocketed by 139%. This is compared with things like clothing and shoes, where prices have actually fallen by 49% in the last two decades, while phone and broadband costs have fallen by 12%.
This just shows how much of our household income is now being spent on utility bills, and makes it even more important to compare energy tariffs when your contract expires. Don't switch to a fixed tariff with your current provider without seeing what else is out there, or even worse, don't simply move onto a standard variable rate, as you'll be paying far more than you need to.
Current customers of SSE and npower may want to be even more on the ball when it comes to their energy bills over the next year and keep an eye on what happens in the market, and it could be worth comparing alternatives now to avoid any uncertainty.
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.