Consumer watchdogs attacked the announcement yesterday that Scottish & Southern Energy is to take over the independent energy supplier, Atlantic Electric & Gas in a deal costing £91m.
Energywatch, the consumer body for the industry, described the takeover as a "blow" to competition in the energy market and called on Scottish & Southern to honour the existing low tariffs offered by Atlantic.
The company, the UK's seventh largest energy supplier with 300,000 customers, was put up for sale last year and Scottish & Southern has been negotiating a deal for six months. Before completing the deal, however, it insisted on Atlantic being put into administrative receivership - a move which took place on Tuesday night. This enabled Scottish & Southern to buy the business without taking on the bulk of its liabilities such as purchase contracts with gas suppliers and electricity generators.
The £91m purchase price breaks down into £10m paid for Atlantic's customer base and £80m to cover the money it is owed by its customers, which Scottish & Southern now hopes to recoup. The takeover works out at a cost of around £50 per customer, including other charges Scottish & Southern will incur.
Allan Asher, the chief executive of Energywatch, said "The loss of one of the smallest, independent energy suppliers, and one of the cheapest, is not a welcome development."
Scottish & Southern said that the market was highly competitive and that it had no plans to change the tariffs paid by Atlantic customers.
The Atlantic takeover will increase Scottish & Southern's customer numbers to 5.5 million. It is the fifth deal the company has pulled off since Ian Marchant took over as chief executive two years ago.