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First Utility in Shell energy deal


By John-Paul Ford Rojas

Independent supplier First Utility has signed an energy-buying deal with Shell that will help it challenge the Big Six energy firms.

Shell will act as an intermediary for First, using its size to get better prices when buying wholesale energy on the global market.

First Utility supplies gas and electricity to 300,000 residential and business customers in the UK.

It hopes it will be able to pass on some of its savings to these customers.

Similar deals in USA and Europe

Trading under the deal begins next week and Shell already has similar arrangements with suppliers in the US and in Europe.

Shell will receive an equity stake in First thought to be in the single-figure percentage.

The agreement replaces the supplier's arrangement to buy energy on wholesale markets through Morgan Stanley.

First Utility says the partnership is designed to accelerate growth and support the development of new product offerings for customers.

Chief executive Ian McCaig said: "This is a significant milestone in First Utility's journey.

"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.

Deal brings exciting potential

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

The UK energy supply market is dominated by the so-called Big Six - Centrica (trading as British Gas), npower, SSE, Scottish Power, E.ON and EDF.

Unlike smaller independent providers, they all also have their own power stations producing energy.

Regulators see opening up the market to allow smaller players better access to wholesale energy as key to improving competition.

First Utility promise no winter price rises

First Utility has already promised not to increase its prices over the winter.

British Gas customers have been told they face a 9.2 per cent tariff hike, with SSE rates going up 8.2 per cent, npower 10.4 per cent, and Scottish Power 8.6 per cent.

However, they have said they will pass on savings from a shake-up on green levies by the government.

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