Npower to cut 900 jobs

"Big Six" energy supplier, Npower, plans on cutting 900 jobs to save costs. This is about 15% of Npower's 6,300 strong workforce.

Npower has said that it is too early to confirm which part of its workforce would be affected by the cuts. Although, a spokesman for the supplier has said it was aiming to preserve its customer service support team.

Chief executive of Npower, Paul Coffey, said

"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"

Npower has stated that the number of redundancies would be "considerably lower" because of natural turnover.

What has gone wrong?

Npower has blamed "an incredibly tough" retail energy market for the decision and the energy price cap which the government introduced at the start of January.

The energy price cap has been designed to keep energy bills below £1,137 a year for a "typical energy user" (a household that uses 3,100 kWh of electricity 3,100 and gas 12,000 kWh of gas). The annual cost will always depend on a household's energy usage, but the standing charge and unit prices that suppliers can charge are currently capped by Ofgem.

It was introduced to stop people who did not switch energy supplier being stuck on expensive default deals. As well as the pressure it is putting on energy suppliers, there are fears it could have a negative impact on how customers engage with the energy industry and discourage people from comparing energy suppliers and switching to cheaper fixed-term deals.

Energy regulator Ofgem has said the cap will save 11 million customers an average of £76 a year on their gas and electricity bills.

Many energy suppliers, including British Gas, have said the energy price cap has made the market unviable with several small to medium energy firms collapsing since it was announced. Two during the month that it took effect.

Npower had planned to merge its retail business with fellow "Big Six" SSE last year, but the firms scrapped the plan after the energy price cap was announced. In terms of customers, it would have created the second largest energy company in the UK. The largest energy company in the UK is British Gas.

The merger would have seen SSE's household energy division, SSE Energy Services, combined with the retail operations of Npower, which is owned by Germany's Innogy.