Npower has announced around 900 jobs are due to be cut due to the “extremely tough UK retail energy market conditions”.

The big six supplier, which has a workforce of 6,300, says it is introducing a programme to reduce its operating costs, largely due to the price cap and intense competition on fixed price tariffs.

Npower says the actual number of redundancies “will be considerably lower” as around 900 people leave the company annually.

Paul Coffey, Npower’s chief executive, said: “The retail energy market is incredibly tough – Ofgem itself forecasts that five of the ‘big six’ energy companies will make a loss or less than normal profits this year due to the implementation of the price cap, and with several recent failures of new energy suppliers, it is clear that many have been pricing at levels that are not sustainable.

“Even with these reductions, we still forecast significant losses this year, but we’re doing everything we can to minimise them whilst continuing to focus on service and value for our customers.”

The supplier said it will consult fully with affected employees and with unions over the proposals.

The first consultations are due to start in early February and compulsory redundancies will be “minimised as much as possible”.

Concerns were raised about job losses after reports that Npower staff were told before Christmas that they would be working for Eon upon completion of the complex asset swap deal between Eon and RWE.

In December last year the planned merger between SSE and Innogy’s retail arm Npower, which would have created the UK’s second largest energy supplier, was called off.

“Adverse developments” in the retail market and “regulatory interventions” such as the price cap were cited as reasons behind the decision.

The two companies had been in discussions to negotiate the terms of the deal since November but were unable to reach an agreement.

A statement from Npower’s parent company said that Innogy SE and SSE plc have “stopped the negotiations on commercial adjustments for combining their retail businesses in Great Britain as announced in November 2017.”

Martin Herrmann, chief operating officer retail of Innogy SE, said: “Adverse developments in the UK retail market and regulatory interventions such as the price cap have had a significant impact on the outlook for the planned retail company.

“We negotiated intensively with SSE on adjustments to the transaction as announced in November 2017. Unfortunately, we could not reach an agreement that was acceptable for both sides. We are now assessing the different options for our British retail business.”

Alistair Phillips-Davies, chief executive of SSE plc, added: “This was a complex transaction with many moving parts.

“We closely monitored the impact of all developments and continually reviewed whether this remained the right deal to do for our customers, our employees and our shareholders. Ultimately, we have now concluded that it is not.

“This was not an easy decision to make, but we believe it is the right one.”

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