Utility Week

Company profile rwe third quarter resuLts ebitda capital expenditure net debt workforce 2012 €6,718m 2013 €6,711m 2012 €3,804m €3,005m 2013 2012 €33,015m €30,784m 2013 2012 70,208 2013 67,267 Profits, retail and generation, £m npower annuaL resuLts 400 300 200 £232m 100 0 £390m £313m 2010 2011 2012 Lessons npower can Learn from British Gas Npower can look to British Gas for a precedent on its customer service woes. The UK's largest supplier went through the painful process of upgrading its billing system in 2006. The number of complaints it received rocketed from 8,012 between October 2005 and March 2006, up to 21,427 in the same period the following year. Eventually, British Gas resolved the teething problems and the number of complaints started to fall back in line with its big six rivals after a turbulent 18 months. Stuart Ravens, an IT analyst at Ovum, said Npower still has a "bumpy road ahead". He said: "Look at British Gas, it took them almost two years of problems with their billing system before it got better. "It could be the same with Npower." 300 250 Complaints per 100,000 customers Npower made some strategic moves last year, too. It sold 770,000 customer accounts to Utility Warehouse in November for £218 million. The sale was prompted by Ofgem's Retail Market Review proposals, which limit the number of tariffs suppliers can offer. As part of the deal, a 20-year wholesale agreement was struck, a canny move for Npower, which has guaranteed itself custom – and income – from these customers for two decades, without having to deal with those messy customer service issues. That £218 million will come in handy. RWE, Npower's parent company, is having a difficult time financially. Its UK generation arm – which since the start of the year has formed part of the Europe-wide RWE Generation – recorded a £59 million loss for the first nine months of 2013. The third quarter interim results highlighted the "significant reduction in operating result", due to "unfavourable market conditions, particularly for gas plant". This has resulted in 6,750 jobs being shed from across Europe as part of an efficiency drive designed to save more than €1 billion. In November, RWE chief executive Peter Terium outlined plans to "shed whatever we do not need in order to continue running our business successfully". Could this include Npower? There have been mutterings in the City of a potential sale – as one analyst told Utility Week: "You do have to start to question just how committed they are to the UK market." But Npower has stamped on these rumours, saying RWE remains committed to the UK. Npower's third quarter profits – up 8 per cent on the previous year at £175 million – back up the company's line. The growth in retail profits was the result of increased energy use during cold weather at the start of the year. One energy analyst put things in a global context, saying: "They are trying to sell the upstream oil and gas businesses first, so one assumes that unless there has been a radical change they would stick with the UK retail business." A cynic might say that RWE is unlikely to try to sell Npower because it would struggle to find a buyer. Either way, it seems the business is staying put, for the moment at least. The new year is often heralded as a fresh start, but for Npower, the bad news has kept coming. The company kicked off 2014 with a bruising row with Ofgem and the Department of Energy and Climate Change (Decc). Ofgem described figures Npower used in its Energy Explained report – in which the supplier hoped to show that suppliers are not responsible for most bill increases – as "inaccurate and misleading", and Decc said the report was "misleading on so many levels". Npower was forced to back down, admitting one of its figures was out by around £15 per customer. Massara was due to talk to Utility Week for this article, but the interview was cancelled. Perhaps he had other things on his mind. 200 150 100 50 0 Jun 05 Dec 05 Jun 06 Dec 06 Jun 07 British Gas EDF Energy Npower Jun 08 Scottish Power Eon Dec 07 SSE UTILITY WEEK | 31sT JanUarY - 6Th FEbrUarY 2014 | 13

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