Business

Npower boss dismisses forfeiting bonus as 'gimmick'

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Media captionPaul Massara: "My bonus is linked to my performance"

The chief executive of Npower, Paul Massara, has dismissed giving up a bonus in response to anger over rising energy prices as a "gimmick".

In an interview with the BBC's Hardtalk, Mr Massara also warned of future power cuts unless there is a "stable environment" for investment.

He said he earned around £600,000 a year, which includes a £150,000 bonus.

On Monday Centrica boss Sam Laidlaw pledged to decline a bonus this year to help restore trust in energy companies.

When asked whether he would match Mr Laidlaw's pledge, Mr Massara said: "I think the issue is, are we doing absolutely everything we can to keep costs down and to make sure it's affordable?

"Gimmicks of saying 'I'm going to reduce my bonus' - If Sam was earning five million a year and he's willing to give a million, good for him.

"My bonus is linked to my performance, is linked to getting it right for customers, is linked to employee satisfaction. All of my team are linked to that. If we don't deliver on that, we don't get a bonus."

He said he thought the lights would stay on this year, but warned: "The amount of spare capacity to meet the peak requirement... has dropped from somewhere around 15% to five.

Rebuild trust

"That is extremely low by historical levels... and unless the UK can create a politically stable environment to attract new capital, that new capital will not come in."

On Monday Mr Laidlaw said the energy sector needed to urgently rebuild consumers' trust and to help do that he would not take a bonus this year.

"Just to continue in this world where households are under pressure, and assume it is business as normal, is not the way thoughtful remuneration committees think about it," he said.

Recent increases of around 9% have caused anger and last month the Commons Energy and Climate Change Committee summoned energy bosses to explain the steep rise in prices.

In September Labour leader Ed Miliband promised to to freeze energy bills for 20 months if he is successful in the 2015 election.

Energy companies complain that government policy is to blame for higher energy prices in particular "green" fees which are added to bills.

Currently 6% of a gas bill and 11% of an electricity bill go to government schemes aimed at saving energy, reducing emissions and tackling climate change.

Mr Massara told Hardtalk: "The more the government creates uncertainty with things like price freezes or other changes, it means there's less certainty and less likely for capital investment."

You can watch the full interview on the BBC News Channel at 00:30 on Saturday 9 November and on the World News Channel on Monday 11 November at 04:30, 09:30, 16:30 and 21:30 GMT.

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