It will be available to all customers across Scotland and operate as an alternative to the current privately-owned giants like npower and Scottish Gas.
The new firm will be set up by 2021 and Ms Sturgeon told delegates at the SNP conference in Glasgow yesterday that the new firm would give allow low income Scots to turn to a supplier only concerned with “securing the lowest price for customers.
It came as the First Minister pledged that a second referendum on independence would be staged in the coming years and called on delegates to make the case with “conviction.”
The SNP had pledged to explore the option of a new publicly owned, not for profit energy company during the campaign for last year’s Holyrood election.
And the First Minister yesterday pledged to establish such a firm by the end of this Parliament. More details will be set out in the government’s forthcoming energy strategy.
“Energy would be bought wholesale or generated here in Scotland - renewable, of course - and sold to customers as close to cost price as possible,” she said.
“No shareholders to worry about. No corporate bonuses to consider.
“It would give people - particularly those on low incomes - more choice and the option of a supplier whose only job is to secure the lowest price for consumers.”
A spokesman for Ms Sturgeon later said the new firm would supply electricity and gas. The “immediate focus” of the new firm would be serving customers in Scotland.
Both Jeremy Corbyn’s Labour party and Theresa May have unveiled plans to cap energy prices, with Labour also having backed a not-for-profit energy firm.