August 13, 2015 / 7:00 AM / 5 years ago

UPDATE 3-Problems at UK's npower drag RWE shares to 24-year low

* Lowers outlook for UK supply unit

* Cites billing issues, loss of customers

* Shares fall to lowest level since August 1991

* H1 operating profit down 11 pct at 2.03 bln eur

* Main burden on earnings: conventional power generation (Recasts, adds fresh CEO quotes, share details)

By Christoph Steitz

FRANKFURT, Aug 13 (Reuters) - Britain joined RWE’s long list of woes on Thursday, problems there pushing shares to a 24-year low and raising pressure on the German utility to follow larger rival E.ON by parting with loss-making power plants.

RWE said the effects of difficulties with billing at its energy supply business in Britain, effectively preventing it from charging clients, as well as a loss of customers hit first-half profits, forcing the company to lower its outlook for the unit.

It now expects UK operating profits to be significantly below last year’s 227 million euros ($253 million). It had previously expected profits to rise moderately.

RWE is already facing the biggest crisis in its 117-year history, grappling with ultra-low wholesale power prices, high exposure to coal and gas and only a small presence in renewables.

“We continue to face strong headwinds,” RWE Chief Executive Peter Terium told journalists during a call. “The crisis in conventional electricity generation, in particular, continues to cause us a lot of trouble.”

RWE, which posted an 11 percent decline in first-half operating profit to 2.03 billion euros, said the billing problems in Britain would not be fixed before the end of 2016.

The group, which has 5.6 million clients in Britain, said it lost about 100,000 household customers there since late last year as competition intensifies. It was only able to retain customers by offering lower prices.

Shares fell as much as 5.9 percent, hitting their lowest level since August 1991, also hit by continuing problems at its conventional power generation unit, where first-half profits were down more than half.

“Quite frankly, it’s simply frustrating that the company’s restructuring is taking so long and that RWE is not following E.ON in spinning off its traditional power plant business,” a trader said.

Coal-fired power plants, which accounted for 60 percent of RWE’s electricity production last year, are under particular pressure from a surge in output from renewables, which continue to replace older, carbon-polluting fossil-fuel fired plants.

At E.ON, which last November took a drastic step in spinning off its power plant business as well as energy trading and oil and gas, coal-fired plants accounted for 27 percent of generation.

RWE’s Terium has said he is not keen on following E.ON’s example, but said he would consider such a move if conditions deteriorate further.

$1 = 0.8981 euros Additional reporting by Daniela Pegna; Editing by Greg Mahlich and Keith Weir

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