Strong competition in the retail market has driven up losses at Npower during the third quarter of 2017.

Adjusted earnings before interest and taxation (EBIT) dropped by £24 million year-on-year to minus £89 million as “record high levels of UK customer churn” cut into margins.

The results were also impacted by the supplier’s effort to reduce the proportion of its customers on standard variable tariffs, which fell to 49 per cent, as well as investments in programmes to support its business customers.

Revenues dropped by more than 3 per cent in the three months to the end of September to £4,264 million. Domestic customer accounts were down by 160,000 when compared to a year ago but up by 50,000 over the last quarter.

In March last year, Npower announced it would make “extensive cost savings”, including cutting 2,400 jobs, as part of a major restructuring of the company.

The overhaul came after the supplier posted an annual loss of £99 million in 2015, down from a profit of £183 million in the previous year. The company failed to return to profit in 2016, reporting an annual loss of £90 million.

Npower-owner Innogy recently announced plans to combine the business with SSE’s retail arm to create the UK’s largest domestic electricity supplier and second largest domestic gas supplier.

“Last week’s announcement of the merger with SSE’s domestic retail operations is a direct reflection of the progress we’ve made so far,” said Npower chief executive Paul Coffey. “In order to be a really successful energy company, we need scale and skills – and this deal will deliver both.

“Looking back over the last nine months, the results of our hard work are starting to come through. While we have reported a loss of £89m year to date, the year-on-year changes for both revenue and EBIT are the smallest we have seen in 2017 so far and we expect to continue to close the gap during the remainder of the year.

“Our customer account numbers have continued to bounce back and we gained 50,000 customer accounts on a quarter-on-quarter basis, about the same number as in Q2.”

He continued: “While we look to the future with the new merger, it’s business as usual in the meantime: we will continue to explore ways of introducing engaging new products and services such as our new Go Green energy tariff.

“Our digital first supplier, Powershop, is continuing to innovate and is getting ready to launch dual fuel in the coming months. In addition, with incentives in place to encourage the electrification of transport, we’re currently exploring offerings for the e-mobility market.”