E.ON takes on new energy customers as smaller rivals crumble

General view of the headquarters of E.ON Climate and Renewables in Essen, western Germany, March 9, 2016. REUTERS/Ina Fassbender

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FRANKFURT, Jan 19 (Reuters) – E.ON (EONGn.DE), Europe’s leading energy network operator, recently absorbed hundreds of thousands of customers across the continent who were left without a supplier after prices records have forced several smaller rivals to crumble, its CEO said.

Although this is only a tiny share considering the group’s 50 million customers in Europe, it indicates how the current price spikes, caused by a mix of growing demand and higher costs of fossil fuels, have become a headache for energy retailers.

“We have taken over several hundred thousand customers in Britain, Germany and the Czech Republic,” chief executive Leonhard Birnbaum told Reuters. “This is putting a heavy burden on us right now.”

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Birnbaum said the unexpected influx of customers was a problem because the group had to supply them with energy at current market prices, which have fallen in recent days but are still almost fourfold in some cases compared to the year. last.

In Britain, where E.ON is the second-largest distributor after Centrica’s British Gas , more than 20 energy companies have exited the market since September, unable to cope with rising prices they cannot not fully pass on to customers. .

Although this was a smaller number in E.ON’s home market of Germany, some local players also defaulted, which Birnbaum said required stricter regulation for new entrants. in the market who do not have the resources to manage a volatile market.

“The energy market is not a market that lends itself to speculation on the retail side,” Birnbaum said, adding that E.ON’s retail business was well positioned and therefore held up better than others during the crisis.

“However, we are paying for having to hire customers from those who have acted uneconomically. We don’t want this to become an annual thing. Something has to happen.”

Birnbaum said he was optimistic that the tough UK retail market, where E.ON recently took over former rival npower, would benefit from market changes regulator Ofgem is considering due to the crisis. Read more

E.ON transferred nearly all of its generation assets to RWE (RWEG.DE) in a landmark deal completed in 2020, but still operates Isar 2, one of three German nuclear power plants to be shut down by the end of 2022.

Once Isar 2 is offline, E.ON’s nuclear division, PreussenElektra, will focus on decommissioning, which Birnbaum said will not hurt profits as the costs will be borne by the company’s provisions.

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Reporting by Christoph Steitz, Tom Kaeckenhoff and Vera Eckert; edited by David Evans

Our standards: The Thomson Reuters Trust Principles.

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