Big Six energy giants 'will lose a quarter of their customers' by 2020.

Telegraph:  “The Big Six energy suppliers will lose a quarter of their customers by 2020 as millions of households switch to cheaper rivals, leading analysts have forecast. The least competitive of the major suppliers are likely to quit the market altogether in a radical shake-up of the energy sector, according to analysts at Citigroup.”
“British Gas, SSE, EDF Energy, E.On, ScottishPower and Npower – collectively known as the Big Six – currently control about 92pc of the household supply market.
But this is likely to fall to less than 70pc by the end of the decade as the market becomes more competitive, the analysts said.
Major suppliers are now faced with a choice between carrying on offering higher prices and losing customers to cheaper challenger brands, or offering cheaper prices and sacrificing the profit margins from their existing customers.
The combined profits of the Big Six could fall 40pc from £1.2bn in 2013 to just £700m in 2020 as a result of the erosion of the market share, lower profit margins and customers using less due to energy efficiency.
“We believe there will be a reversal of previous industry consolidation over the coming years as independent suppliers and generators take market share and less competitive players exit,” Citigroup said.
The Big Six would all ultimately need to “restructure their supply businesses drastically to lower their costs and become price competitive, and improve their customer service experience to stem the flow of customer losses”, they said.
The analysts highlighted Npower as the supplier that was most vulnerable to losing customers. “Npower, with the highest admin costs per customer and weak customer service score, appears to us least well positioned to retain market share,” they said.
They suggested that some of the Big Six may decide against the investment and overhaul needed to remain competitive and instead sell on their customers or wind down their businesses as customers leave.
“We may well see some participants simply running their supply business to maximize cashflow in the short term and exit the market at some point,” they said.”