First Utility to grow Scottish market

THE UK's biggest independent energy supplier is targeting expansion in Scotland after securing funding that it claimed would put it on a level playing field with the big six utility companies.

First Utility last week sealed an agreement to buy its wholesale gas through Morgan Stanley, with the global banking giant's US affiliate, Morgan Stanley Capital Group, taking a 9.9 per cent stake in the firm.

The supplier has 45,000 customers in the UK but hopes to sign up another half a million households over the next four years on the back of the deal. It will aim specifically to build on a growing customer base in Scotland, where it has proportionately more customers than any other region of the UK.

Darren Braham, chief financial officer at First Utility, said: "Our agreement with Morgan Stanley offers the perfect platform on which to grow the business. One of the challenges for a small business is buying energy and working capital is tied up in that. This solves that problem and puts us on a level playing field with the big six."

The firm's proposition is based around Smart Meter technology which allows households to track their daily energy usage. First Utility is the only company offering the meters, which have to be in all households by 2020 under plans set out by the Labour government.

It has around 2,500 customers in Scotland, where it began rolling out Smart Meters last year, with the bulk in Edinburgh and Glasgow. Braham said it would now target households in other large population bases in Scotland after developing affinity partnerships with firms north of the Border.

"The Scottish suppliers have probably lost the least market share in the UK since the market was deregulated so there is a good opportunity if we can target those who have not switched from their incumbent suppliers," he said.

First Utility, based in Warwick, shook up the energy market a year ago along with fellow minnow Ovo by launching online tariffs that sparked a round of price cuts by the big six. But higher than expected business levels also created customer service issues at the firm, with delays in providing customers with Smart Meters.

However, Braham, who said there was now a deal in place with National Grid firm OnStream to install the meters across the UK, cited Smart Meters as the firm's main advantage in the coming months as energy prices rise again.