German energy group E.ON on Friday announced a restructuring plan for its struggling British division, which includes Npower in a move it said would incur costs of 500 million pounds ($642 million).
The plan includes closing parts of Npower and additional job cuts at the unit, one of Britain's 'Big Six' energy providers, which has been hurt by struggling competition and internal billing problems.
"The U.K. market is currently particularly challenging. We've emphasized repeatedly that we'll take all necessary action to return our business there to consistent profitability," E.ON CEO Johannes Teyssen said in a statement.
He said talks with British unions about the plans - which include a carve-out of Npower's industrial and commercial customers - had already started, not giving a number for potential job losses.
E.ON said Npower's residential and small and medium-size enterprise customers would migrate to E.ON's local business, while the remaining parts of Npower would be restructured or shut down.
E.ON said it expects its combined British business to achieve at least 100 million pounds of earnings before interest and tax and positive free cash flow after smart meter investments from 2022 onwards.