News Column

Npower blames government and costs increase for 38pc profit fall

August 15, 2014

SUZIE NEUWIRTH



BIG SIX energy supplier Npower yesterday posted a 38 per cent slump in first-half profit to 176m, which it blamed on increased customer service costs and government levies.


The company, which is owned by German power giant RWE, lost more than 62,000 domestic customers during the first half of the year, after various surveys found it to be the most complain-ed about supplier of the big six.


"RWE npower continues to focus on improving levels of service for our domestic customers," it said.


"Total number of complaints received by Npower in the second quarter of 2014 has been reduced by over 18 per cent compared to the first quarter."


Npower also said that costs from the Energy Company Obligation - a scheme funded by companies to help insulate their poorest customers' homes - were higher in the first half of the year.


The company's generation arm posted a 74m loss, due to the closure of older coal and oil-fired power stations last year and the "continued problems with the economics" of its gas-fired power plants.


Meanwhile, Npower's parent company RWE yesterday reported a 62 per cent drop in profit to 749m (600m) and said that unprofitable coal- and gas-fired power stations might be mothballed in Germany and the Netherlands.


"The expansion of renewable energy and significant decline in wholesale electricity prices have caused the utilisation and margins of our power plants to deteriorate significantly," said RWE's chief executive Peter Terium.


It maintained its full-year outlook. Shares in the Germanlisted group fell 2.7 per cent at market open.


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Source: City A.M. (UK)


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