Thousands of UK jobs at risk as EON takes Npower clients

London: Plans to restructure Innogy SE’s UK energy supplier Npower and migrate its household customers to EON SE’s British business could put as many as 4,500 jobs at risk, according to Unison, one of the nation’s biggest unions.

Companies said they will consult and work with the trade unions. Innogy isn’t providing any numbers regarding how many positions are at stake, a spokeswoman said.

Npower has been bleeding money for years. The UK energy retail market has traditionally been dominated by the six big utilities, but their share is shrinking with smaller and more nimble rivals undercutting prices. In a far cry from Margaret Thatcher’s liberalisation drive decades ago, lawmakers from all parties have turned against the traditional suppliers, with former Prime Minister Theresa May introducing a price cap to stop what she called “rip off” contracts.

“The UK market is currently particularly challenging. We’ve emphasised repeatedly that we’ll take all necessary action to return our business there to consistent profitability,” EON Chief Executive Officer Johannes Teyssen said. “For this purpose, we’ve put together proposals and already begun discussing them with British unions.”

EON took over Innogy as part of an asset swap with RWE AG that was completed earlier this year. The German utilities in the early 2000s flocked to the U.K market where light-touch regulation and low business rates offered a profitable alternative to increasing competition and higher taxes in Germany.

Npower’s market share for electricity has fallen from 15 per cent in 2004 to 8 per cent in the second quarter of 2019, according to regulator Ofgem. The company had 4.2 million retail customers by the end of 2018, according to the company.

The restructuring is expected to cost about £500 million ($645 million), EON said. The company expects its combined UK business to deliver at least £100 million in earnings before interest and taxes from 2022 onward and thus to generate positive free cash flow.