E.ON has partnered up with Octopus Energy, as the German company aims to revamp its UK retail business and shift away from the Npower brand.
E.ON said on Monday the deal would speed up profit growth in a market hit by stiff competition and a regulatory price cap, according to Reuters.
The German group acquired large parts of Innogy, including the loss-making Npower brand in Britain, as part of an asset-swap with German peer RWE.
Both E.ON and Npower were among the Big Six that have been losing customers to new challengers, such as renewables energy specialist Octopus.
In a partnership deal with Octopus’s unit Kraken Technologies, E.ON said it would pool its own residential and commercial customers and those of Npower in a new subsidiary, called E.ONnext.
It forecast E.ONnext would make earnings before interest and tax (EBIT) of at least 250 million pounds beyond 2023.
E.ON board member Karsten Wildberger said in a statement: “In November we announced that we would successfully reposition our business in the UK and counter the difficult market conditions.
“The formation of E.ONnext is the key step in achieving this goal quickly and to the benefit of our customers in the UK.”
E.ONnext will rely on Kraken’s customer platform and be home to Npower’s and E.ON UK’s residential and commercial clients, who will be migrated in spring 2020 and 2021, respectively.
Innogy said earlier on Monday that Npower lost 143,000 customers in the fourth quarter, bringing total customer losses in 2019 to 590,000.
Other parts of Npower will be shut down or sold as part of the plan announced in November.