Energy Bills: Npower Deal Creates 'Big Seven'

A new player in the UK energy market is to be created after npower agreed a deal to offload 770,000 customer accounts.

They form part of npower's Electricity Plus and Gas Plus subsidiaries, which were sold for £218m to Telecom Plus, a supplier of energy and telephony services trading as Utility Warehouse.

The deal, which will not result in any change to customer service and contracts, is expected to be completed by early January.

It is the result of new rules from the industry regulator Ofgem which limit the number of tariffs on offer to domestic customers to a maximum of four.

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 - a situation that has resulted in fierce debate in recent weeks over political intervention to ensure a fair marketplace for consumers.

Npower, which is part of Germany's RWE Group and recently topped a league table for customer complaints , currently has 5.4 million household accounts, while price rises have prompted more people to look at switching from the big six firms to a smaller competitor.

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 new 20-year energy supply agreement which should enable it to provide more competitive tariffs to its customers.

The company said the deal boosted its medium-term target of supplying gas, electricity, fixed-line telephony, mobile telephony and broadband to more than one million customers.