The deal between the two companies will come in to action next week and mirrors agreements which Shell already has in place with other energy providers in both Europe and the USA.
As part of the agreement, Shell will receive an equity stake in First Utility which industry analysts believe is in single figures.
First Utility currently supplies gas and electricity to roughly 300,000 households in the UK and has promised not to raise energy bills this winter.
Agreement will ‘underpin our proposition to offer customers competitive rates in the market’
Speaking on the deal between the two companies, Chief Executive of First Utility Ian McCaig said: “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.
“Shell’s experience with independent providers in North America and Europe demonstrates the exciting potential that this deal brings.”
Competition for the big six
The big six energy companies – British Gas, EDF Energy, E.ON, npower, ScottishPower and SSE – currently supply close to 95% of all UK households. Each of these companies has raised its prices this winter.
E.ON was the last of the big six to announce a price rise and last week said it would be adding 3.7% to its average consumer’s energy bill.
Recent cuts to green levies will see the average consumer’s dual fuel bill drop by £50, but will not change the fact that for most bills will still have risen considerably this year. In addition, not all of the big six have announced when they will be passing green levy related savings on to their consumers.