Thursday 31 January 2019 6:00 pm

Npower to dismiss nearly 15 per cent of its UK workforce as energy market bites

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British energy provider Npower has said it will cut almost 15 per cent of its UK workforce, as part of an initiative to reduce its operating costs.

The company said the reductions would affect around 900 roles out of its 6,300 employees over the course of this year. It added that most of this number are expected to leave of their own accord rather than be made redundant, as the amount is reflective of Npower's usual employee churn rate.

Chief executive Paul Coffey said the move was the result of the retail energy market becoming "incredibly tough" in the wake of Ofgem's price cap.

Read more: British Gas owner Centrica wades into legal battle with regulator Ofgem over price cap

"Ofgem itself forecasts that five of the Big Six energy companies will make a loss or less than normal profits this year due to the implementation of the price cap, and with several recent failures of new energy suppliers, it is clear that many have been pricing at levels that are not sustainable," said Coffey.

“Even with these reductions, we still forecast significant losses this year, but we’re doing everything we can to minimise them whilst continuing to focus on service and value for our customers.”

A total of 11 small energy suppliers have gone bust in the past year, including most recently Our Power. Its chairman told City A.M. last week that the Scottish government-backed firm had simply "run out of cash".

A spokesperson for the department of business, energy and industrial strategy later responded to Coffey: “Our price cap protects 11m households from poor value standard variable and default tariffs, and ensures that consumers pay a fair price for their energy.

“Ofgem designed the energy price cap independently, through consultation with industry, so that an efficient supplier can continue to thrive.”

Read more: Energy supplier Our Power 'ran out of cash' after string of bankruptcies in sector

The move comes after Npower's parent company Innogy failed to come to an agreement in December to merge its retail arms with SSE.

The two firms had planned to list the merged unit as a new company, and had even passed initial investigations by the Competition and Markets Authority before SSE pulled the plug.

"Just a few months ago Npower was involved in causing great uncertainty to the workforce by announcing that it was involved in merger talks with one of the other Big Six energy companies," said Laura Gatiss, northern regional organiser for industrial trade union GMB. 

"That merger failed. Now Npower is announcing major job reductions which is understandably worrying for our members, their families and indeed local communities where our members live in."