The owner of npower plans to cut more than a fifth of its British workers as it braces itself for a fresh attack by the consumer watchdog.
RWE will say that it will axe about 2,500 UK jobs from its 11,500-strong workforce, which includes about 7,500 who work for npower, one of the six big energy utilities.
The grip of the Big Six on Britain’s 28 million households will be the focal point of the Competition and Markets Authority when it unveils its latest recommendations for shaking up the market on Thursday, after a two-year investigation.
In an update last Month, RWE said that it expected “burdens” in its UK supply business to continue this year, having lost 200,000 customers in the first nine months of 2015. RWE’s British business forced it to a shock loss after a €2.1 billion writedown on its UK and German power stations. Npower parted company with Paul Massara, its chief executive, in August.
The Big Six have suffered a steady erosion in customer numbers as a new breed of independents encroach on to their territory. The industry also has suffered stinging criticism from the CMA and politicians for overcharging customers who fail to shop around, who are more likely to be poor, disabled or single parents. Npower was fined a record £26 million in December by Ofgem, the regulator, for billing problems that affected more than half a million customers.
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RWE, which declined to comment, was immediately criticised by unions. Dave Prentis, the general secretary of Unison, said: “Npower has been in trouble for some time thanks to poor decision-making at the very top, and workers are now paying the price. The company’s failure to invest properly in new systems has left it with one of the worst customer service records in the business.
“The news suggests that npower’s German owner isn’t terribly committed to its UK operations. Cutting a fifth of the workforce will leave the already struggling business in an even worse state. Now months of uncertainly lie ahead for a workforce whose morale is already at rock bottom.”
The company was rocked last month by the partial collapse its power station in Didcot, Oxfordshire. One contractor was killed and three are still missing.
Npower, which has 4.9 million accounts, has several big plants in the UK, including Pembroke and Aberthaw in Wales and Staythorpe in Nottinghamshire. Along with other big suppliers, it announced a 5.2 per cent price cut to its standard domestic gas tariff.
Oil and gas prices have tumbled as global growth slowed. Brent crude is about 70 per cent lower than its peak in the summer of 2014. RWE said last week that writedowns on its power stations and lower energy prices would lead the group to an annual loss of about €200 million. Analysts had expected a 2015 net profit of €1.2 billion.
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The CMA said last year that British families were overpaying by up to £1.2 mllion a year because of stagnation in the market. The big companies point to the arrival of independent providers as evidence of competition, but Ofgem found that about 40 per cent of the market has never switched supplier.