News : Npower Profits Fall 38% on Customer Service Costs
August 14, 2014 -- Npower, owned by German energy provider RWE, has reported a 38% drop in profit for the first six months of the year.
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.
The energy provider 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.
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.
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 extra 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".
Posted by Veronica Silva Cusi, news correspondent
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npower is one of Britain’s largest energy suppliers and supplies gas, electricity and related services to 6.6 million customers across the UK.
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