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Shell has agreed to buy the energy supplier First Utility, giving the oil giant its first foothold in the UK’s household energy market.

First Utility is the biggest energy supplier in the UK outside the so-called “big six”. The company supplies 825,000 homes with gas, electricity or broadband.

Shell is already active in the wholesale energy market, but this is the first time it will supply UK homes directly.

The price of the deal – which is subject to regulatory approval – has not been revealed.

First Utility will be owned by Shell’s New Energy division, which focuses on low carbon generation.

“This combination will enable Shell to enter a new part of the energy market in the UK and to improve choice for customers by delivering innovative services at competitive prices,” said Mark Gainsborough, Shell’s executive vice president of new energies.

Darren Braham, co-founder and chief financial officer of First Utility, said: “Shell has been our strategic trading partner for a number of years, and we are excited about the extra value and propositions we can deliver to customers as a result of this sale.”

Last year First Utility made a pre-tax loss of £12.7m, following fierce price competition from the big six providers. However it has since returned to profitability.

Shares in Royal Dutch Shell jumped around 1% following news of the deal.

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