As Npower plans to exit the UK energy market, reports suggest that its parent company Innogy has suffered losses of £427m due to the pressure building up in the UK home energy market. Npower, the Big Six gas and electricity supplier suffered a loss of £96m this year and is feeling the pressure of the government’s energy price cap initiative. Being a Big Six supplier, it has been blamed for not offering cheaper energy deals to the domestic energy customers.
Prime Minister Theresa May has announced an energy price cap, which is expected to be implemented from winter 2018. As per the declaration, price capping would be on the Standard Variable Tariffs offered by the UK gas and electricity providers. By shifting the customers on SVT, the Big Six close all doors of cheap energy bills for its customers. Npower also faces stiff competition from the new energy suppliers that offer some of the cheapest energy deals to the domestic energy customers.
Npower’s failure to offer lower energy tariffs and the constant political pressure has lead to its retreat from the UK market. Innogy, the German owner of the gas and electricity provider mentioned that the company made a pre-tax loss of €102m in the first three quarters of 2017. This was way more that €81m, which the company lost in the first three quarters of 2016. To manage things, Innogy plans a merger with SSE which will likely take place in early 2019. The move is expected to create a stir in the UK energy market and change the positions of the Big Six energy suppliers.
The new company formed through the merger would be the largest electricity supplier in the UK and would be second to British Gas in having highest gas customers in the UK. Paul Coffey, chief executive of Npower cleared the air by saying that “While we look to the future with the new merger, it’s business as usual in the meantime: we will continue to explore ways of introducing engaging new products and services such as our new Go Green energy tariff.”
He also mentioned that the company has been successful in retaining its 50,000 energy customers in the last quarter and has done significantly well in raising the levels of customer satisfaction. The gas and electricity provider is trying hard to survive but would surrender for the merger to sustain the pressures of the energy sector. Meanwhile, other Big Six energy suppliers are also facing the heat of the market as the profits are falling down.
This is contrary to the claims made by energy experts who suggested that these dominant energy companies are making huge profits through their Standard Variable Tariffs. This might seem to be a step to put a pressure on the government and Ofgem in order to stop their intervention in the energy market so that the Big Six energy suppliers can enjoy their dominant place in the energy market. Whatever be the scenario, the UK home energy customers are left with no choice but switch energy supplier.
Energy experts suggest that energy swap is the best method to save on energy bills. They suggest that household should keep a habit of switching energy suppliers to minimize their utility bills. To find the cheapest energy supplier, one should compare energy prices in UK and choose the one that offers the cheapest energy tariffs with good service.
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