Discussing Energy Economics on the Internet

Another Hopeful UK Retailer

Posted in Retail,UK by Cheryl Morgan on the January 13th, 2009

Platts reports that a new entrant to the UK’s retail electricity and gas market is offering the lowest duel-fuel deals around, undercutting the “big six” incumbent suppliers.

Well they would have to, wouldn’t they. But will they survive? The UK’s retail energy market has a long history of consolidation by incumbents and failures by new entrants. First:utility will need to have something special to offer if they are to survive in a market where economies of scale are everything. Looking at their web site, it appears that their edge is intended to come from smart metering and encouraging demand management on the part of their clients. Presumably that means that they’ll be able to buy more baseload power and less peaking power than their rivals, hence the lower average charge.

We shall see. I wish them luck, but it is a tough market. Their biggest challenge might be to convince potential customers that they are not going to be out of business this time next year.

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