Big Six energy provider RWE npower saw its profits drop by 6% in the first half, as price hikes in November failed to offset rising fees to use the power network and one-off regulatory costs.
The UK unit of the German power giant reported a reduced operating profit of 206 million (£177 million), despite hiking its gas and electricity prices by 8.6% and 8.8% in November.
The unit blamed “substantial additional costs” relating to complying with new regulatory requirements which oblige UK energy companies to simplify their residential tariff structures.
“The persistent trend towards energy efficiency also led to earnings shortfalls,” the company, which sponsored the Football League last season, said.
Meanwhile, parent company RWE said it will mothball or shut down some of its gas and coal-fired power stations across Europe because rising renewable energy generation, especially solar, is reducing demand for fossil-fuel generated energy.
A total of 3100 megawatts of generating capacity will be taken off line, representing about 6% of the group’s total capacity. The stations likely to be affected are in Germany and the Netherlands, with the UK not expected to be hit since gas-fired power generation is increasing here.
RWE also reported a 38% drop in first-half profit to 979 million, largely on the back of an impairment charge on the company’s Dutch fleet of power plants. The company pledged to reduce operating costs to mitigate the pressure on its business.