How the UK gas market works
A brisk tour of how the UK gas market works will help to explain how Ebico fits into the big picture. Find out more about who does what, how your gas is supplied, and how the market forces operate.
Today’s UK gas market is based on two principles: impartial access and competition.
Impartial access
Most of the gas pipes in Great Britain are now owned by National Grid. National Grid has a licence to move gas around the country on behalf of all suppliers, but has to do so according to the Network Code, which ensures impartial commercial terms.
National Grid has sold off some of their network to a number of Independent Distribution Network Operators, who in turn have to operate in accordance with the Network Code. (However, there are a few independent owners of pipeline on some new housing developments – it can be trickier for households in these areas to switch suppliers.)
National Grid also has the job of making sure that there is enough gas available in our pipes to meet our national demand. To see where all the gas is coming from in real time, take a look at this.
Competition
All households connected to the gas main can – in principle – choose any licensed gas supplier to supply their gas. This competition means that suppliers’ prices to customers are restrained to the lowest level consistent with making a profit.
However, in practice British Gas still supplies around half of UK households, despite often charging higher prices than its competitors. They spend millions on advertising to assure their customers that they’re getting a ‘great’ deal; so many customers don’t even consider whether an alternative would be better for them. Others never get round to checking out other suppliers’ prices, or like to consider themselves loyal customers.
But in fact everyone is free to choose the supplier of his or her choice.
Switch companies are online companies that, in theory, offer a neutral comparison service. They enable customers to see quickly online (or find out by phone) what different energy companies have to offer, and how much they could save. The comparison or ‘switch’ company will then sort out the switch to the new supplier for them.
However, suppliers are requested to pay the switch company a fee for every customer that chooses them via the switch company’s service. So currently, switch companies cannot offer a genuinely neutral comparison – because not all suppliers choose to pay switch companies.
Currently, switch companies cannot offer a genuinely neutral comparison – because not all suppliers choose to pay them
Ebico is a reliable alternative supplier that for the majority of people would also be their cheapest option. But while switch companies are obliged, by Energywatch (the consumer champion), to list us, we do not in general choose to use our customers’ money to pay them. We aim to reverse the market trends to make energy cheaper for those who can least afford it, and this doesn’t include spending money to persuade others to promote us.
The Office of Gas and Electricity Markets (OFGEM) is the body that oversees the processes of the competitive gas supply market. If you have a problem or comment about the competitive market you should contact OFGEM with your views.
If you have a problem with your supply company which has not been resolved you should contact Energywatch. The Government has announced that, in 2008, Energywatch is going to be merged with the National Consumer Council and Postwatch to form an overall consumer champion organisation called ‘Consumer Voice’.