Are long running issues bringing down RWE npower?

As far as notoriety goes, few power companies are as well known in the UK as RWE nPower. They may have experienced countless name changes over the years, but the foundations of the company have plenty of long standing history. While the company has certainly had its fair share of highs over the years, RWE nPower has sadly fallen from grace since the turn of 2015. In fact, the problems with RWE nPower are more prominent in 2015 than they have ever been before. Many analysts have been quick to write off RWE nPower as a viable investment, so are long running issues now bring the company down?

RWE-npowerThe biggest issue to strike down RWE nPower has come through shocking profit level dips. Tumbling doesn’t even begin to describe the 60% fall that has taken place in 2015, with the company struggling under the weight of billing issues and customer complaints. Since late 2013, the company’s customers having begun to turn their back on the brand as billing has become a major issue, with the total number of customers leaving the power company now topping 300,000. These billing issues are now three years in existence, with the company stating that they feel the problems could run onto the end of 2016 and beyond. However, the company does insist that it is taking necessary steps to solve such issues.

The billing problems and an Ofgem investigation have contributed to RWE nPower becoming the most complained about power company in both 2013 and 2014, with 2015 looking to head the same way. It is these billing issues that RWE nPower blame for their fall from grace from an investor and company standpoint. In 2014 the company earned €133 million, yet in 2015 that figure plummeted to just €53 million. Speaking on the dramatic fall in profits, RWE nPower chief executive Paul Massara said “The main part of our drop in profits has been due to the continued impact of the systems issues that hit our domestic business last year” and “the challenges that we have faced were tougher than we expected but we know what the problems are and are taking the right steps to fix them”. He believes that investors shouldn’t be quick to abandon RWE nPower as the company is improving, “Already this year, we’ve made real improvements for our customers, halving the number of complaints we receive, meaning complaints are at their lowest level since 2011”.

It is evident that RWE nPower has seen its star fall somewhat drastically in 2015, but the problems sadly don’t just lie within the billing problems. The bargaining power of the company has also waivered as Massara has said “[RWE nPower] is often only able to retain residential customers with expired contracts by offering them new contracts with more favourable conditions”. What’s evident is that RWE nPower has lost its shine, with continuous problems now weighing the company down.

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Alexander Bowring is a London based writer and a Southampton Solent University Screenwriting graduate. He has worked alongside TV personality and Telegraph feature writer Alison Cork, whilst also having produced content for ITV, This Morning, Canvas8, Who’s Jack, Alison at Home, and Bonallack & Bishop Solicitors. Alexander also has a keen interest in investments.

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