The SNP leader told the party’s conference yesterday that the company will sell energy to customers at “as close to cost price as possible”.
“Energy would be bought wholesale or generated here in Scotland – renewable, of course – and sold to customers as close to cost price as possible,” the First Minister said. “No shareholders to worry about. No corporate bonuses to consider.”
The announcement comes as Ofgem revealed it would extend price protection to 1 million more vulnerable households this winter.
Scotland’s first not-for-profit energy supplier Our Power was established by social housing providers and local authorities in 2015 to offer great service and lower prices for gas and electricity.
Full details for the new energy company, due to be set up by 2021, are set to emerge in a forthcoming energy bill, though it is understood the new firm would supply electricity and gas.
Renewable energy body Scottish Renewables, which called for the introduction of a ‘Scottish Renewable Energy Bond’ in its Scottish Parliament manifesto paper in January 2016, has welcomed Ms Sturgeon’s plans.
Claire Mack, chief executive of Scottish Renewables, said: “Scotland’s public sector has a key role to play in leading the next chapter of Scotland’s energy evolution.
“A publicly-owned energy company could play an important part in adding value to existing support schemes and addressing specific market failures.
“This could, for example, include being a ‘one-stop-shop’ or gateway to accessing public funds, helping communities navigate this often complex and confusing landscape.
“It could also be home to our proposed Scottish Renewable Energy Bond, helping accelerate the deployment of community renewable energy projects across Scotland by improving access to finance and mobilising existing public support for the sector.”
Emma Grant McColm, energy spokesperson for the Consumer Futures Unit at Citizens Advice Scotland (CAS), added: “As Scotland’s consumer champion we are interested to note this announcement and we look forward to hearing more detail. We would welcome any intervention that genuinely increases fairness for energy consumers.”
Meanwhile, around 1 million households will save £120 a year on average when Ofgem extends its prepayment safeguard tariff for more vulnerable people this winter, the regulator has announced today.
Following Prime Minister Theresa May’s announcement last week to revive a plan to cap charges for an extra 12 million consumers, Ofgem will work with the UK government so that all those on standard variable and other default tariffs receive price protection as soon as possible if legislation is in place.
Dermot Nolan, chief executive of Ofgem, said: “Ofgem shares the government’s concern that the energy market is not working for all consumers and is determined to reduce the detriment suffered by those overpaying for their energy, particularly those who are vulnerable.
“The government’s proposed bill to provide price protection to those who remain on poor value default deals, such as the standard variable tariff, will give these households peace of mind about the price they pay for their energy.
“In the meantime, we expect suppliers to do more to get customers on poor value default tariffs onto better deals.
“We also expect suppliers to co-operate when Ofgem initially introduces a safeguard tariff for around 1 million vulnerable households this winter.
“The introduction of further price protections will give time for Ofgem’s reforms to work and for smart meters to be rolled out across the country as we move towards a smarter, fairer, more competitive market.”