Npower: What went wrong for Paul Massara

He had such high hopes. Paul Massara set out to turn around Npower's customer service on stepping into the role of chief executive in January 2013, but on Monday he finally conceded defeat. Speculation about his departure has been swirling since the start of the year, and the rumours became deafening with the publication of the latest bruising results earlier this month.

Massara, a well-liked figure, made a gracious exit on Monday, leaving “by mutual consent”, posting on social media: “I am extremely proud of the Npower team and everything we have achieved to date. We have made progress and built a strong foundation but most importantly we have changed the culture to one of being totally committed to customers.”

For its part, RWE politely thanked Massara and chief financial officer Jen Madrian, also departing, for their contribution.

So just what went wrong for Paul Massara?

That customer service pledge

The pledge in January 2013 to take Npower from the bottom to the top of customer service tables by the end of 2015 was not just aspirational, it was arguably overambitious. At the time Npower had just received a score of 39 per cent in a Which? customer satisfaction survey, placing it firmly bottom of the big six. But Utility Week understands that staff struggled to buy in to Massara’s lofty aspirations, losing motivation in working towards a ‘fantasy’. In March Npower admitted the target was unlikely to be hit.

Billing system woes

Npower implemented a new billing system in May 2013. It could have been the panacea for its customer service issues, but instead the move from three separate regional systems to one new billing system created yet more problems. It resulted in some customers not receiving bills for up to a year, while others received inaccurate bills or bills for accounts that weren’t their own. Massara’s overhaul of the system pushed costs “higher than expected,” but did little to stop the complaints coming in.

Ofgem steps in

As a direct result of the billing system change, customer service levels suffered “serious deterioration” to a level Ofgem found unacceptable. The regulator stepped in in December 2013. Massara was forced to apologise to every one of his 3.4 million domestic customers for the company’s performance throughout 2013. Massara claimed “good progress” had been achieved, paid out £1 million to charity by way of recompense and promised to make amends by spring 2014.

A year later, Ofgem stepped in again. Last month the regulator secured free energy for 1000 Npower customers with unresolved ombudsman complaints. Npower said it was continuing to take steps to improve its customer service and while some complaints were outstanding, overall ombudsman complaints were down 10 per cent since the beginning of the year.

Disastrous H1 results

Parent company RWE’s H1 results earlier this month revealed just how bad things had become for Npower. Profits have more than halved since the beginning of the year to just £38 million from £109 million; a “steep decline” as a result of 300,000 customers leaving the supplier. RWE’s UK profits were slashed by £11 million to £24 million, with the remaining profit mainly coming from Npower’s business arms. Massara admitted that customer systems were to blame, conceding the challengers were “tougher than expected.” Eleven days later, he was gone.

What next?

Paul Coffey is the man tasked with turning Npower’s fortunes around. A reportedly dynamic, driven and capable leader, Coffey burst onto the RWE scene ten years ago and is well respected within the wider group. A source told Utility Week that Coffey has been headed for the chief executive position for the last two or three years, with his recent role as chief operating officer at the supplier likely to have been a training mission for the eventual top job.

RWE’s chief executive Peter Terium said Npower needs a chief executive who “has a track record of implementing operational process changes. Paul Coffey has repeatedly demonstrated this expertise”.

But two major challenges stand in his way. Firstly, despite his many years in the energy sector, Coffey has little experience of running a domestic retail business with 5000 staff. Getting to grips with the organisation’s pure scale will be job number one. Dealing with head office in Germany will be challenge number two – how much autonomy can he hope to have?