Npower profits fall 38% on customer service costs

Power station and wind turbines RWE has said that it is considering mothballing some plants if they failed to cover costs

Npower, owned by German energy giant RWE, has reported a 38% drop in profit for the first six months of the year.

Profit before tax and interest payments on debt fell to £109m, or about £14 per customer, from £176m last year, Npower said.

The firm is spending more on improving customer service, while costs of the government's energy efficiency scheme have risen.

RWE reported a 40% fall in operating profits in the first half.

It said that coal and gas power stations could be shut down because low wholesale prices were making them unprofitable.

The company also blamed the mild weather and one-off factors for the drop in profits to 2.27bn euros (£1.8bn).

Covering costs

The energy giant said the potential mothballing of plants raised concerns about capacity in Europe.

"This does not bode well for security of supply, to which wind turbines and solar panels cannot make a large contribution," RWE chief executive Peter Terium wrote in a letter to shareholders.

The UK and France have plans to reimburse energy firms for power plants that do not cover their costs, but are needed to secure the supply of gas and electricity if renewables failed to deliver.

Npower logo Npower says it is improving its customer service operation after topping complaints tables

Npower has 3.5 million customers with 5.37 million accounts in the UK.

The energy supplier said that it was on course to meet the targets set by regulator Ofgem to ensure it sent out more bills on time.

It must ensure that no more than 100,000 invoices are sent late by the end of August. The figure had been running at 414,000 late invoices in mid-June, but this had fallen to 193,000 by the end of July.

Unless it meets the targets by the end of August, Npower will have to stop all "proactive telesales" to new customers, Ofgem has warned.

Npower said it had spent an extra £20m this year to improve customer service and to write-off some of the latest bills. In June, BBC Radio 5live heard from customers who had been sent demands more than a year after leaving Npower.

Executives admitted that they had "got it wrong" on bills but were spending money to fix the problem.

They also said they had overhauled the customer service operation after topping the complaints tables for the big six energy firms operating in the UK every quarter since the end of 2012.

A switch in billing system led to huge customer service failings, with Citizens Advice branding the operations as "unacceptable".

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