German energy group E.ON has announced a restructuring plan for its struggling British division, which includes Npower, in a move it said would incur costs of £500m. 

The plan includes closing parts of Npower and additional job cuts at the unit, one of Britain's 'Big Six' energy providers, which has been hurt by struggling competition and internal billing problems. 

The restructuring of Npower will result in 4,500 job cuts, union UNISON said in a press release today.

"This is a cruel blow for Npower employees. They've been worried about their jobs for months. Now their worst fears have been realised, less than a month before Christmas," UNISON general secretary Dave Prentis said.

"The UK market is currently particularly challenging. We've emphasised repeatedly that we'll take all necessary action to return our business there to consistent profitability," E.ON's CEO Johannes Teyssen said. 

He said talks with British unions about the plans - which include a carve-out of Npower's industrial and commercial customers - had already started, not giving a number for potential job losses. 

E.ON said Npower's residential and small and medium-size enterprise customers would migrate to E.ON's local business, while the remaining parts of Npower would be restructured or shut down. 

E.ON said it expects its combined British business to achieve at least £100m of earnings before interest and tax and positive free cash flow after smart meter investments from 2022 onwards.