E.ON & Npower Customers Leaving In Large Numbers

Npower, one of the big-6 energy suppliers, reported that it had seen over 261,000 customers leave them between July and September in 2019. Similarly, E.ON also reported that its customer numbers continued to fall last year.


Big-6 losing customers to smaller players


Large energy providers have seen a significant chunk of customers switching over to smaller and more competitive brands. As customers seek to cut down energy expenses with increased time being spent indoors, more consumers are expected to switch over from Npower and E.ON to suppliers with better tariffs. Overall, 5 million customers switched their energy suppliers in 2019.

Npower had revealed that its operating loss over 9 months stood at over £150 million.   The firm stated that it expected the operating loss for the entire year to reach over the £220 million mark.  Innogy stated the major factor behind this decline in its customer base was the entry of energy tariff price capping in Britain.


As per Johannes Teyssen, the Chairman and Chief Executive of Innogy, this loss-making retail operation of theirs was like an open wound that was ‘bleeding more as time passed’. Npower is the retail arm for Innogy and was recently purchased by E.ON.  E.ON had warned that it would not be tolerating a loss-making company for too long.


Profits down by over 33%


As per the market watchdog Ofgem, profits of the 6 largest energy suppliers in the UK have come down by over a third. The regulator released a State of the Market report which revealed that close to 40% of the electricity firm switching that happened between July 2018 to June 2019 was from customers who switched over from these 6 big suppliers to smaller providers.


And that is not all -a report released earlier this week revealed that just last month alone, over 100,000 consumers switched over from small and medium firms to the big-6 energy providers. This could be an indication that smaller players may have turned the tide and a more conclusive observation can only be made in time.


Not the end of troubles


Consumers switching over is just one part of the trouble for the big-6 firms. Commercial and industrial users had been consuming considerably less power due to the coronavirus lockdown measures. While this has been termed as a ‘temporary impact’ on their sales and network, there is no clear indication yet as to when this consumption would pick up. E.On stated that its core business posted steady earnings last year.

The customer solutions of E.ON, however, witnessed earnings go down by over £80 million due to the loss of customers and price caps enforced in the UK. This comes after their announcement in 2019 wherein E.ON said that it would be folding Npower’s small business and domestic customers into their own business. This move, along with the price cap measures, prompted over 4,500 job loss across Npower.

Innogy has also decreased its outlook on Npower performance. The firm stated that it expects that the retail profit range would be between £200-300 million, which is a sharp £100 million reduction as compared to the earlier figures. This news continues the trial of a rough 12 months for the firm. Last year in December, Innogy was compelled to cancel its planned merger with the retail arm of SSE. This was later purchased by a smaller challenger brand, Ovo.


While E.ON stated that it expected earnings to increase in 2020, it was yet to factor in the coronavirus fears and the economic downturn that was going on currently. With customers all over Europe consuming lesser energy, the sector would be impacted due to the outbreak but may not be hit as hard compared to other sectors. A positive sign from the firms was that they would not be disconnecting supply to financially vulnerable customers ‘for the time being’. However, how that plays out in the months to come remains to be seen.