Npower in the red for third year in a row amid customer exodus
The German-owned gas and electricity supplier reported narrowing annual losses as it prepares for a merger with rival SSE.
Monday 12 March 2018 17:15, UK
Big Six energy supplier npower has reported an annual loss for the third year in a row after losing 155,000 customers amid "fierce competition" between suppliers.
But the gas and electricity company, owned by Germany's Innogy, said its operating loss of £56m was narrower than last year's £90m as it implemented a cost savings programme.
The results come as npower lines up a merger with Big Six rival SSE - a merger which may have been complicated by a high-level deal involving Innogy over the weekend.
Npower chief executive Paul Coffey said the industry was facing "real challenges" with plans to impose a cap on standard energy tariffs amid public anger over gas and electricity bills.
Suppliers are also paying to implement Government schemes such as installing smart meters.
Npower said it saw revenues fall by £76m to £6.027bn over the year amid "fierce competition between suppliers" with a high level of customer switching and smaller profit margins on new customers lured away from rivals.
Customers were also increasingly moving away from the controversial default standard variable tariffs (SVTs) towards fixed tariff deals.
Npower said its customer losses came after it put up its SVT in March last year, but that for the rest of the year it had gained customer accounts.
The total number stood at 4.56 million at the end of the year.
Mr Coffey said: "Energy supply remains an extremely competitive market.
"Rising costs and the changing regulatory landscape, such as the proposed SVT price cap, present all energy suppliers with real challenges."
Npower is one of the six firms that dominate the UK domestic energy market, together with British Gas (owned by FTSE 100-listed Centrica), SSE, France's EDF, German-owned E.On and Spanish-owned Scottish Power.
It was announced last year that npower was to merge with the household supply division of Big Six rival SSE to form a new firm - a deal that is now in the early stages of an investigation by the Competition and Markets Authority (CMA).
A deal announced in Germany over the weekend involving Innogy's owner RWE will see npower's current ownership pass to E.On, prompting speculation about the implications for the SSE tie-up.
But Mr Coffey said the proposal remained "on track".
Innogy said it did not expect the RWE transaction with E.On to have a "material impact" on the npower-SSE merger.
The CMA said on Monday that it would be engaging with both SSE and Innogy to consider the implications of the new German deal.
Jefferies analyst Ahmed Farman said: "The deal the CMA has been looking at is between Innogy's npower and SSE, but now if npower is owned by E.On, that's three of the Big Six involved.
"It could potentially complicate things from a regulatory point of view."