Telecom Plus to buy Npower subsidiaries in big six challenge

Multi-utility supplier Telecom Plus plc is on the verge of buying two energy supply units from RWE Npower, in order to make its tariffs more competitive with the big six group of suppliers.

The company, listed on the London Stock Exchange as Utility Warehouse Discount Club, provides various services such as gas, electricity, telephone, broadband and mobile services, and has become Britain’s largest independent energy supplier.

Shares in the company jumped up to 15% on the stock market as a result of the RWE Npower deal.

The agreement commits Npower to supply gas, electricity and other services to Telecom Plus and its 770,000 customers for the next 20 years.

If the deal is approved, it would improve energy margins by 4.25% and will allow the firm to offer more competitive tariffs to its rising number of customers.

Market analysts said recent increases in energy prices was leading to customers switching to smaller suppliers.

However, according to Npower boss Paul Massara, Telecom Plus is on its way to making the big six the big seven.

“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”, he said.

Telecom Plus has previously defended the big six during consistent accusations of profiteering made by MPs over recent weeks.

Andrew Lindsay, chief executive of the firm, said that the energy companies were being “hung out to dry as scapegoats” by politicians.

“They all move [prices] broadly in time with one another because they are all facing broadly the same costs – the same regulatory burden and wholesale markets from which to buy,” he said.

“It’s hardly surprising that they appear to move in tandem and it’s totally disingenuous of the politicians – who loaded all these costs up onto them – to then say actually they are crooked”.

Further reading:

Ed Davey: energy firms should not squeeze customers for higher returns

Energy price hikes lead to low consumer trust in industry

Ed Davey says energy companies must put customers in control

Big six energy bosses grilled by MPs over price hikes

Energy bosses forfeiting bonus is a ‘gimmick’, says Npower chief