Utility Week

UTILITY WEEK | 27TH SEPTEMBER - 3RD OCTOBER 2019 | 7 News and with it tougher trading conditions for energy retail in the UK. It was off the back of this deal's failure that Ovo saw an opportunity. Right up until December last year SSE was set to merge with Npower, creating a new energy company complete with its own board. As a result of the merger collapsing, Npower remained part of parent company Innogy and was therefore involved in the transaction which saw Eon acquire the majority of Innogy's shares, and Npower as a result. At a press conference in Essen, Germany last week (17 September), Eon chief executive Johannes Teyssen was asked about the timeframe for integrating Npower into the business. Speaking with little apparent enthusiasm, he said: "That is the job that the Eon/Innogy board members will have to tackle, as soon as we have something to say we will talk. Currently we have looked into the giŽbox, it is not very full, so we will have to wait and see." In comments published elsewhere, Teyssen is reported to have referred to Npower as an "open wound which bleeds heavily" – hardly a ringing endorsement. And who can blame him? Npower is a loss-making business and has been for some time. Suppliers are fac- ing a lot of pressure in terms of margins and Eon will not be relishing the prospect of taking on such a business as Npower. Compare Teyssen's response with that of Ovo chief executive Stephen Fitzpatrick and you can see how vastly different these deals are. "This transaction marks a significant moment for the energy industry. SSE and Ovo are a great fit. They share our values on sustain- ability and serving customers. They've built an excellent team that I'm really looking forward to working with," said Fitzpatrick. Furthermore, Eon's deal almost went completely under the radar. There was little coverage in the media about the implications of Eon acquiring the majority of Innogy's shares, which is curious when you consider the fact the deal is set to fundamentally shake up the big six. Ovo has made a big and bold play and clearly sees the chance to scale up as a major stepping-stone to becoming a supplier of the future. To this end, it last week unveiled plans to halve its customers' carbon footprints by 2030. That carbon-reduction announcement follows a lot of proactive media from the company regarding its deal with SSE. Eon, in contrast, has said very little with regards to its deal, while Npower has said it would be inappropriate for it to comment, directing enquiries instead to Eon HQ in Germany. Eon has placed all the emphasis on how the transac- tion will affect its other businesses in Europe. But for the UK, the all-important question remains – what is to be done with Npower? So far, Eon is remaining tight-lipped about what it will do, but the door is open to a number of options. These could include a potential sale, but this is an option which has been tried before. Customers could also be integrated into Eon Energy, or Npower could be wound up completely. The future is unclear. Either way, we can be sure to expect more big devel- opments soon. MARKET SHARES CURRENT ELECTRICITY MARKET SHARE CURRENT GAS MARKET SHARE POST-DEAL ELECTRICITY MARKET SHARE POST-DEAL GAS MARKET SHARE Source: Look After My Bills British Gas 19% British Gas 28% British Gas 19% British Gas 28% SSE 13% SSE 10% Npower 8% Npower 7% Ovo 5% Ovo 5% Ovo 18% Ovo 15% Eon 12% Eon 10% Eon 20% Eon 17% Smaller suppliers 22% Smaller suppliers 24% Smaller suppliers 22% Smaller suppliers 24% Scottish Power 10% Scottish Power 8% Scottish Power 10% Scottish Power 8% EDF 11% EDF 8% EDF 11% EDF 8%

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