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Broken Promises? Looking back on the npower / E.ON Merger

Worries and an uncertain future continue to loom for employees of UK energy company Npower. The company is in the middle of its 2-year restructuring process and as part of this restructuring, the company’s new owner, E.ON, will gradually merge Npower’s business with their own. This, however, is not the first time such a merger has been on the cards for Npower.

 

The fallout of the SSE merger

 

Back in 2018, Npower’s plan of merging with SSE fell through. SSE is the owner of the 2nd largest energy company in the United Kingdom. The merger was called off after the increased competition that led to their failure to fix a deal and the government’s enforcement of price-capping on default tariffs.

 

After this failed merger, it was announced that Npower would finally be merged with E.ON. This was not a welcome outcome for E.ON since it already has its own energy supply arms for homes and businesses in the United Kingdom. The fate of over 6,400 employees hung in the balance. Just a few days before Christmas in 2018 the staff was informed that as the asset swap concludes in 2019 they would end up working for E.ON – which was another failed promise.

 

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There were already questions about how viable it would be for the parent company to run 2 energy businesses in the UK. Analysts had predicted several rounds of painful structuring with many employees at the receiving end of job cuts.

 

The announcement could not have been more ill-timed. While speculations about job cuts had been doing the rounds for several months, the formal announcement came just around Christmas.  The news also attracted a lot of criticism and fiery reaction across unions. The job cuts were described as a ‘horrific’ act to the company’s staff.

 

‘Npower would cease to exist’

 

The CEO of E.ON UK, Michael Lewis, in a 2019 interview to a news channel, talked about the ongoing restructuring at Npower. He mentioned that customers would not see any immediate impact as a result of the restructuring, however, the Npower brand would be phased out. This would not happen suddenly but would take place gradually over the coming years. The CEO made these comments only a few days after E.ON, the new owner of NPower, announced some 4,500 job cuts in the UK’s 6th largest energy company.

 

Npower’s losses and condition

 

Lewis, during the same interview, had talked about ‘treating employees fairly’ during the transition. The CEO went on to ensure employees that the firm would take all steps to mitigate the impact of the restructuring. The job cuts were described as ‘necessary’ due to the situation that Npower was in.

 

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As a business, Npower had been suffering from operational losses for a few years. The price-cap enforcement had a significant impact on all firms in the retail energy segment, with Npower being one of the worst-hit. The majority of the small business and domestic customers were transferred over to E.ON UK, while Npower’s division that supplied power to large industries and businesses would continue to operate independently for a while.

 

What future has in store for Npower employees

 

Just a few days ago, it was announced that the business energy supply units of Npower and E.ON would be merging. As part of E.ON’s move to bring everything under a single roof, the two suppliers would be brought into a single unified I.T. system. This was being done to provide customers with better service and smarter solutions.

 

However, with this move, history is set to repeat itself. While there are no official estimates or guidelines as to how many jobs may be affected due to duplication of roles, employees at Npower are again looking at an uncertain future. The companies termed it as the latest step in the creation of a sustainable business and an effort to succeed in what is a particularly challenging market.

 

How this plays out in the coming months and how many employees stand to lose their jobs in what is already a stressed job market remains to be seen. One can only hope that this does not turn out to be like the last time – a move that cost thousands of people their jobs.