(Bloomberg) — Plans to restructure Innogy’s (DE:) U.K. energy supplier Npower and migrate its household customers to E.On’s (DE:) British business could cost thousands of jobs.
EON and Innogy will consult and work with trade Unions and employee representatives on the plan and are committed to mitigating the impact on employees, they said in a statement on Friday. But the merger of customers could put as many as 4,500 job cuts and the closure of many of Npower’s sites in the U.K., according to Unison, one of the nation’s biggest unions.
Npower has been bleeding money for years. The 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 liberalization 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 U.K. market is currently particularly challenging. We’ve emphasized 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 (DE:) 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.
Innogy isn’t providing any numbers regarding how many job are at risk.
“It is inevitable that a transformation of this scale will have an impact on the workforce,” the company said.
Workers will be given details at briefings later on Friday.
Npower’s market share for electricity has fallen from 15% in 2004 to 8% 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.
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