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Late Payers Put Squeeze On E.on’s Profitability

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One of Britain’s biggest energy suppliers is facing a mountain of bad debt as its industrial customers put off paying their electricity and gas bills to solve cashflow problems.

E.ON said that its bad debts in the UK were running at the level of “hundreds of millions of poundsâ€, a burden that the utility argues must be taken into account by Ofgem in its investigation into current retail energy pricing.

“We have not made a profit [in the UK retail market] since 2006. We will not make a profit this year,†an E.ON spokesman said. “We have a problem with industry paying their bills.â€

In August RWE, the Germany utility that owns npower, warned that its UK retail business was affected by payment problems. “Social obligation costs, as well as bad debt, reduced our earnings significantly,†the company said, indicating that npower’s results would be lower this year and affected by public policy. “[uK] governmental programmes in 2009 are expected to cost up to €100 million [£87 million] more than last year,†RWE said.

The recovery is well and truly under way. The more late payers we have the stronger the recovery.

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