Shell and First Utility target German retail power market

FRANKFURT | BY VERA ECKERT | Wed Sep 30, 2015 

Shell, a brand well known to car owners throughout Germany, has expanded a partnership to provide households with gas and electricity in Europe’s biggest retail market.

The oil major’s supply and trading arm Shell Energy Europe and First Utility, a UK-based independent energy provider, on Wednesday unveiled Shell Privatenergie, a new household energy supplier that pools their energy sourcing and marketing powers.

“We are betting on a partnership with Shell as an energy company with a high ability to procure, as well as a high market strength,” Maik Neubauer, managing director of Hamburg-based First Utility GmbH, told Reuters.

Germany has an abundance of competition: industry group BDEW says consumers have a choice of 1,190 retail power companies and 890 selling gas.

But 70 percent of its 40 million households have not ventured away from their original supplier after years of liberalisation, mainly for fear of complicated tariffs and out of concern that the hassle won’t justify the savings.

Neubauer said First Utility would offer “transparent tariff structures and sustainable customer service” to persuade people to switch.

In Britain, First Utility doubled customer numbers in three of the last four years. Neubauer said Shell Privatenergie can replicate some of that success in Germany, where he said many suppliers are only active in regional niches.

From Wednesday, Shell filling stations and Internet campaigns will advertise new gas and power contracts aimed at the 7 million members of Shell’s ClubSmart loyalty card scheme. Shell has 2,200 German filling stations used by one million customers each day.

They will be able to collect bonus points with the new products which can be exchanged against goods or discounts on gasoline.

First Utility will administer the contracts and pay licence fees to Shell.

“This agreement allows us to access the household market in Germany through a trusted relationship with First Utility,” said Jonathan McCloy, general manager for northwest Europe for Shell Energy Europe.

First Utility’s push into Germany marks its first overseas move, while the London-based Shell unit also hopes to explore areas beyond wholesale and industry supply activities.

German retail prices and thus margins, however, have fallen, along with declining global fuel prices.

The annual power bill of a typical family cost 1,112 euros ($1,246.44) in September, 2.4 percent less than a year ago, and gas cost 1,270 euros, 2.5 percent less year-on-year, said internet portal Verivox.

(additional reporting by Karolin Schaps in London, Editing by Mark Trevelyan)

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