A NEW player in the UK energy market is to be created after RWE Npower yesterday unveiled a deal to offload 770,000 customer accounts.
They form part of Npower’s Electricity Plus and Gas Plus subsidiaries, which were sold for £218 million to Telecom Plus, a supplier of energy and telephony services trading as Utility Warehouse.
The deal is the result of new rules from energy regulator Ofgem, which limit the number of tariffs on offer to domestic customers to a maximum of four per company.
As Utility Warehouse already manages the brands on behalf of Npower, the sale will allow the two companies to continue to offer their customers up to four tariffs under their respective brands.
It will also meet demands for greater competition in the industry at a time of rising energy prices. Npower, which is part of Germany’s RWE Group, currently has 5.4 million customer accounts.
RWE Npower chief executive Paul Massara said: “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 seven’ rather than a ‘big six’.”
Utility Warehouse will continue to receive its gas and electricity from Npower under a 20-year energy supply agreement. This should enable it to provide more-competitive tariffs to its customers, the firm said.
The company added that the deal boosted its medium-term target of supplying gas, electricity, fixed-line telephony, mobile telephony and broadband to more than one million customers.
The deal, which will not result in any change to customer service and contracts, is expected to complete by early January, subject to regulators’ approval.
Charles Wigoder, executive chairman at Telecom Plus, said: “This is a transformational deal for the company, delivering significant earnings enhancement, a revised and improved 20-year supply agreement with Npower and the opportunity for us to provide even more competitive energy prices to our customers in future.
“The combination of these will play a major role in helping us to accelerate our current rate of high-quality organic growth and to achieve our goal of supplying our unique, multi-utility proposition to more than one million customers over the medium term.”
FTSE 250-listed Telecom Plus – which sold the business to Npower back in 2006 – will fund the deal through a share placing and open offer to raise £100m and by drawing down £100m from a loan facility recently-agreed with Barclays.