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Npower hasn't paid corporation tax for three years

Energy company RWE npower's new gas-fired Pembroke Power Station during its completion ceremony in Pembroke, Wales September 19, 2012. Credit: REUTERS/Rebecca Naden

The chief executive of one of the country's biggest energy firms, npower, has admitted to MPs that his firm has not paid corporation tax for three years.

It comes after the company's profits rose 34% to £413 million last year.

Paul Massara told the Energy and Climate Change select committee that the company invested more than £5 billion over the last five years in UK infrastructure.

This investment, combined with losses in their retail business between 2009-2010, meant they weren't eligible for corporation tax.

Mr Massara said: "This is in no way tax avoidance, and all of our business is taxable in the UK.

"We've not paid corporation tax because we've been investing hundreds of millions to keep the UK's lights on."