‘Big six’ energy firm npower is to cut up to 900 jobs in the UK, blaming “worsened market conditions” including the price cap on default tariffs.
The company said it was looking to save costs as it forecast “significant losses” for 2019.
It made the announcement after the planned merger of its household supply operations with that of rival SSE was abandoned last month – weeks before the price cap came into force.
The company’s statement said: “Npower is today announcing a programme to reduce its operating costs in response to the extremely tough UK retail energy market conditions, in particular Ofgem’s price cap and intense competition on fixed price tariffs.
“The proposed reductions are likely to affect around 900 roles over the course of the year out of npower’s current 6,300 workforce, although as around this number of people leave the company each year, the actual number of redundancies will be considerably lower.”
Npower said it would be consulting staff and unions early next month.
Chief executive Paul Coffey added: “The retail energy market is incredibly tough – 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.
“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.”
The price cap on default tariffs came into force on 1 January to protect households who fail to switch from paying what the prime minister described as “rip-off” charges.
The biggest companies argued there was already effective competition in the market because dozens of suppliers had entered the fray – most under-cutting their charges because they had no infrastructure costs to take into account.
A number of smaller firms have collapsed this winter – nine across 2018 – as energy costs have risen and they failed to secure enough from their fees.
National energy officer of the Unison union, Matt Lay, responded to npower’s statement: “This is grim news and means an anxious few months for staff across the company.
“But it’s just the tip of the iceberg – npower isn’t the only firm struggling.
“The UK’s entire retail energy market is broken and in need of an urgent fix.
“Households across the country are now better off because of the price cap. But as more energy suppliers shed staff, or go under completely, it’s businesses and consumers who’ll end up picking up the tab.”