Competition in the UK domestic energy supply market is set to be enhanced according to UK energy company RWE npower, which announced on Wednesday that npower Limited is to sell its subsidiaries, Electricity Plus and Gas Plus, to Utility Warehouse brand owner Telecom Plus for GBP218m by share sale.
RWE npower, part of European electricity and gas company RWE Group, agreed the sale with Telecom Plus on 19 November 2013. Completion of the transaction is expected in late December or early January, subject to both the approval of Telecom Plus shareholders and the OFT.
Under the agreement, Telecom Plus Plc will pay an initial GBP196.5m to npower for the subsidiary companies and their electricity and gas customer accounts. A further GBP21.5m will be paid after three years.
The company said that on completion of the sale, more than 770,000 npower customer accounts will no longer be included within its reported customer numbers and will be transferred to Telecom Plus’s Utility Warehouse, further enhancing its position in the UK energy supply market. However, npower added that these customers will not see any changes in their service or contracts when their energy supply is continued by Utility Warehouse. In addition, npower has agreed to supply electricity and gas and certain other services to Telecom Plus for these customers for the next 20 years at a competitive rate.
CEO RWE npower, Paul Massara, commented: “In one move we have helped to create the biggest independent competitor in Britain’s household energy supply market. This is good for competition and good for consumer choice. Today’s announcement shows that Britain is well on the way to having a Big 7 rather than a Big 6.”
“Both Electricity Plus and Gas Plus have expanded substantially over recent years and we are pleased to be able to provide long term support for an entrant which now has more than 770,000 customer accounts nationwide. This shows that there is a willingness to compete in Britain’s energy market, and that the market is anything but broken.”
“This is good news for Utility Warehouse customers, for npower, and for the energy industry.”