First Utility is rebranded as Shell Energy

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Shell Energy enters domestic energy market by regranding First Utility

On 25 March 2019, Shell has rebranded First Utility as Shell Energy and switched all of its residential customers, approximately 700,000, to 100% renewable electricity.

All retail energy customers will also receive a 3% discount on petrol and diesel at Shell petrol stations.

The Shell Energy Proposition – why it’s likely to be big…very BIG

The Shell brand is both big and synonymous with energy, which gives it a great platform for growth. Shell Energy will also have the possibility of selling their home energy brand through their network of retail petrol stations, of which there are more than 1,000 across the UK.

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For energy consumers the rebranded core proposition is very attractive. It combines;

  • 100% renewable electricity as standard on all tariffs.
  • Participation in the Shell Go+ rewards program.
  • An exclusive 3% discount off fuel at Shell petrol stations for Shell Energy customers (capped at 60 litres per household per month).
  • Offers on broadband.

In addition, as at today’s launch, Shell Energy is offering one of the most attractive short-term fixed price tariffs in the market, with no exit penalty.

The exclusive discount of fuel, worth up to £25-£30 a year based on current petrol prices, will no doubt be attractive to motorists.

According to statista, The Statistic portal, households spent an average of £21.20 per week on motor fuel (petrol, diesel and other motor oils/fuels) in 2018. Annually that comes to a fuel spend of around £1,100. A 3% discount is worth a potential saving of £33 a year, although at current petrol prices this is likely to be capped at around £25-£30.

Some Background Information to the Shell Energy rebrand

First Utility was founded in 2004 by co-founders Mark Daeche, Darren Braham and Marcus Citron. It became active in domestic energy retail from 2008.

Over the past 10 years First Utility has grown steadily to become an established challenger brand. However, its customer base eroded in recent years due to competition. At the end of 2016 First Utility had 883,000 customer accounts. This fell by 8.5% (to 808,000) at the end of 2017.

Shell announced that it would acquire First Utility Limited in December 2017. The acquisition was completed on 28 February 2018. The sale price was not disclosed but was rumoured to be around £240 million, allowing the founders to pocket around £110 million for their stake.

Comment

Joe Malinowski, founder of the new energy search site energyscanner.com commented.

“Shell’s entry into the domestic energy supply market could be big, very big indeed. 100% renewable electricity as standard will have widespread appeal and motorists will find the discounted fuel attractive. Couple that with a market leading discounted tariff with no exit fees, and the offering is hard to beat.”

Joe Malinowski, concluded.

“It’s not just the Big 6 that need to be worried. Many challenger brands will find it difficult to compete with such a well-known brand coupled with a strong product proposition. It wouldn’t surprise us to see more “challenged” suppliers shutting up shop as the pace of competition in retail energy markets intensifies.”

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