Germany’s second-largest utility, RWE, plans to cut about 2,500 jobs at npower, a source close to the matter said, as it confronts customer losses and billing issues at its struggling British subsidiary.
RWE is facing the biggest crisis in its 118-year history, faced with ultra-low wholesale power prices, large exposure to coal and gas and only a small presence in renewable energy. Its shares have more than halved over the past year.
In Britain, tougher competition has caused a loss of about 200,000 customers in the first nine months of the year, compared with 100,000 for the first half. That has prompted a review of the business, which its finance chief said in November might trigger job cuts and even a sale.
Npower now has 5.4 million customers in Britain, but a problem with its billing process has meant it has been effectively unable to charge some customers. It does not expect the issues to be resolved until the end of 2016.
Npower swung to an operating loss of 66 million euros (51 million pounds) in the January-November period, compared with a 90 million-euro profit a year earlier. RWE said it would take at least until 2017 for Npower to return to profit.
The source said the job cuts would be made both internally and to contractor staff. Npower’s website says it employs about 9,700 staff.
In December, npower was fined 26 million pounds ($37 million), the largest-ever fine for a British power utility, after overcharging customers and improperly handling customer complaints.
Npower, one of Britain’s six largest power companies, declined to comment on the job cuts, which were first reported by Sky News.
The source said that more details about the cuts may emerge at RWE’s annual press conference, which is scheduled for March 8.