London Power, which has partnered with Octopus Energy, aims to offer fairer prices to all Londoners, while its green element sees electricity generated from 100% renewable sources.

Any profit that City Hall makes will be reinvested into community projects helping Londoners living in fuel poverty and will also go towards tackling climate change.

London Power offers a 12-month fixed tariff – My London fixed yearly plan – which it claims will be within the cheapest 10% of similar tariffs available on the market. It estimates customers switching to it could save up to £300 a year on bills.

It claims pre-payment customers could save up to £160 switching to the My London Top-up Plan. London Power said this tariff is in the top three cheapest on the market.

Customers will also benefit from no exit fees on either tariff and once their contract comes to an end, they’ll be rolled onto the cheapest similar tariff rather than a pricey default tariff.

London Power is supplied by Octopus so it doesn’t have its own licence. It confirms it will provide smart meters and will offer the Warm Home Discount. Further, its tariff is unique so it’s not available via Octopus.

The launch comes as research reveals Londoners spend an estimated £3.5bn on gas and electricity bills every year but the capital has one of the lowest levels of switching.

More than a million people are also living in fuel poverty, with Newham having the highest level.

The Mayor of London, Sadiq Khan, said: “It is a disgrace that many Londoners pay too much to heat and light their homes, with more than a million living in fuel poverty. That’s why I’ve launched London Power – to give all Londoners access to a better, fairer deal safe in the knowledge that they won’t be automatically switched to a rip-off tariff when their contract ends.

“London Power is a different kind of energy company. For the first time we have a fair, affordable, green energy company specially designed for Londoners.”

Stuart Jackson, co-founder and CFO of Octopus Energy, said: “Octopus Energy has been at the forefront of affordable, fairly priced green energy since our inception four years ago. We couldn’t be happier to launch London Power in partnership with the Mayor, to offer Londoners a good deal on planet-friendly power and to reinvest City Hall’s profits into community projects aimed at creating a more carbon neutral city.”