RWE has announced a major restructure of its UK business after losing £154 million across Npower and its UK generation arm in 2015.

Npower said it would make “extensive cost savings”, including cutting 2,400 jobs, following a £99 million loss in 2015, compared with a profit of £183 million the previous year.

The supplier blamed its poor performance on high levels of competition, reduced sales and problems with its customer service and billing systems which began in 2013 – it lost nearly 7 per cent of its customer base, which dropped from 5.13 million in 2014 to 4.77 million by the end of 2015.

The energy giant’s UK generation business also suffered in 2015, reporting losses of £55 million, which it attributed to low wholesale power prices, and a £450 million asset write-down announced in February. However, it said cost controls and the sale of its Fawley site in Hampshire helped it to perform better than in 2014.

RWE has announce a two-year recovery plan for Npower, which will see the number of people employed directly or indirectly by the firm fall by 2,400 from its current level of 11,500.

The supplier said it would achieve savings by resolving the issues with its customer service and billings systems, and by reducing the number of systems its uses. It also said it would make sure bills were accurate and arrived on time.

It said it would bring in outside players to help deliver services and would continue to reduce its number of sites, grouping any that remain around three regional hubs.

Finally, alongside its work on smart meters, it will continue to invest in digital technology.

RWE Npower chief executive Paul Coffey said: “Npower results continue the trend seen earlier in 2015, but they are nonetheless extremely disappointing and we are starting a two-year process to fix them. 

“They show a business that tried to do too much, too soon while not focusing enough on the fundamentals in a constantly changing market. This led to over-complicated processes and procedures resulting in unhappy customers, too many complaints and extra costs to put things right.

“These issues are not insurmountable. Over the past few months, we have looked at every part of Npower, and over the next two years we’re fundamentally changing how the company operates.”

What to read next