First Utility Signs Deal With Shell In Bid To Cut Prices

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First Utility has signed a new deal with energy wholesaler Shell, in a bid to cut its own tariff prices and help customers save on bills.

The independent energy provider hopes that the deal will help it offer cheaper energy to its customers and strengthen its position to give the Big Six energy companies a run for their money.

The deal will give Shell an equity stake in First Utility, which is thought be in single figures, and replace the energy company’s initial plan to secure energy on international markets from Morgan Stanley.

It will also allow First Utility better access to wholesale energy which regulators believe is key to boosting market competition. Unlike the six major energy providers, independent companies do not own their own power stations so need to find other ways to source and sell energy to their customers.

The UK’s energy supply market is currently dominated by companies British Gas (owned by Centrica); nPower; Scottish Southern Electric; Scottish Power; E.ON and EDF. Together these six companies account for 95% of the current market.

First Utility, meanwhile, which governs just 1% of the market, hopes it will be able to pass on the savings it will make from the Shell deal onto its customers. Shell is said to have also made similar arrangements with other energy companies in the US and the rest of Europe.

First also says that the partnership should help to accelerate company growth and support the development of new products. Chief executive Ian McCaig said:

“Our agreement with Shell provides us with the ideal strategic partner to support our growth and underpin our proposition to offer customers competitive rates in the market.

Shell’s experience with independent providers in North America and Europe demonstrates the exciting potential that this deal brings.”

First Utility is the largest energy provider outside of the Big Six, and like many others it is garnering increasing attention and regard for the service it offers to its customers, including competitive pricing. It has already promised that it will not be increasing its prices over the coming winter.

Meanwhile, British Gas recently announced a 9.2% price hike for its customers, while those with SSE will face a rise of 8.2%. nPower has dealt its customers a blowing 10.4% price increase, and Scottish Power 8.6%.

Because of recent green levies issued by the government, E.ON announced it would only be raising prices by 3.7%, less than it otherwise would have been. EDF issued a similar price hike of 3.9%.

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