​Our Power promises to cut fuel bills for an initial 200,000 low income households

Fuel bills could be slashed for people on low incomes with the launch of a new community energy company.

Our Power Energy is backed by 35 not-for-profit organisations including housing associations and community groups and will buy gas and electricity at wholesale rates promising to undercut the big six suppliers.

It plans to be selling energy to 200,000 homes across Scotland by 2020 – most of which will be social housing in areas of known deprivation – saving members up to 10% on their utility bills and passing on savings of £11m over the next five years.

Backing for the project comes from the Scottish Government, which gave £2.5m, and Social Investment Scotland, which gave investment finance of £1m.

This ground-breaking company will make a real difference to tens of thousands of low income households - Alex Neil

Scottish social justice secretary Alex Neil said: "Fuel poverty is at its highest level in a decade with fuel prices having risen by an inflation-busting 7% between 2012 and 2013.

"A recent investigation by the Competition and Markets Authority (CMA) found that millions of energy customers are paying too much for their energy bills.

"That is why the Scottish Government has invested £2.5m in Our Power. It will be the first independent and fully-licensed energy supply company registered as a non-profit distributing organisation owned by its members.

"This ground-breaking company will make a real difference to tens of thousands of low-income households who are currently disadvantaged in the energy market and struggling to pay their bills."

Alastair Davis, chief executive of Social Investment Scotland, said: "Fuel poverty is a major issue for many households throughout Scotland. However, by removing profit from the equation, Our Power offers a new way of tackling this problem."

Our Power hopes to branch out into generating renewable energy once it gauges the success of its current venture.