Tesco beats rival with Norweb deal to plug into the gas market

Tesco laid down the gauntlet to British Gas yesterday by becoming the first big supermarket chain to offer discounted gas supplies to its 10 million customers who take part in the Clubcard discount scheme.

The UK's largest supermarket group has signed a deal with Energi, the domestic fuel brand launched last year by Norweb, United Utilities' electricity arm. Tesco Clubcard customers who register for the scheme before 1 May will received 1000 bonus points, worth pounds 10, if they sign up to switch from British Gas to Energi.

Mike Brindle, marketing director for Energi, said the scheme would also apply to electricity customers when the domestic market finally opens to competition from the Autumn. The roll-out of domestic gas competition, which began in 1996, will be completed by 23 May under a controversial accelerated timetable from Ofgas, the industry watchdog.

Energi said Clubcard customers would get savings of up to 20 per cent on their gas bills, worth around pounds 60 off an average pounds 300 household bill. Details of the deal were confidential, although Norweb is funding customers' extra Clubcard points earned for every extra pound of their bills.

Several independent gas suppliers are thought to have courted Tesco and the other supermarkets to use their loyalty card databases. Tesco last year looked closely at forming its own gas business, but is believed to have lost interest after adverse publicity about dubious doorstep sales tactics from other gas suppliers.

Tesco will send out the first Energi offers later this month to Clubcard holders, though under data protection rules they have to get in touch with the supplier directly to sign up.

Its choice of Norweb as its partner surprised industry experts yesterday, because Norweb has been slower than ScottishPower or Eastern Group to move into the gas market. However, Norweb said more than 120,000 of its existing electricity customers had signed up to take gas supplies when the market opens to competition on 27 February.

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