The future of one of the leading energy suppliers in the UK is uncertain after failing to meet a critical financial requirement. Ovo, serving approximately four million customers, disclosed that it has reached an agreement with the regulatory body Ofgem to address the shortfall, although there remains ambiguity regarding the timeline. This situation raises significant doubts about the company’s ability to sustain operations.
The energy sector witnessed nearly 30 domestic suppliers collapsing due to the surging wholesale gas prices following Russia’s invasion of Ukraine in 2021. This resulted in substantial financial burdens on the surviving firms, impacting customer bills. In response, Ofgem implemented new financial safeguards in April to absorb severe market shocks.
In April reports indicated that Ovo was the only major supplier that did not confirm compliance with the financial resilience standards. Chris O’Shea, the head of Centrica, the parent company of British Gas, criticized competitors failing to meet these targets, suggesting they should be restricted from acquiring new customers.
Ovo, established in 2009 by entrepreneur Stephen Fitzpatrick, experienced a significant financial swing from over £1 billion in profits in 2023 to a £167 million loss last year. Despite this, the company emphasized the strength of its core business and ongoing investments in customer service and sustainability efforts.
An OVO representative reassured stakeholders that the company is well-funded with support from long-term shareholders and financial facilities from entities like Shell. They emphasized that the current capital requirements are new to all suppliers and should not be seen as a reflection of Ovo’s service capabilities or current performance.
A consumer group survey by Which? ranked Ovo alongside So Energy and British Gas at the bottom for customer service satisfaction. The assessment involved nearly 12,000 Which? members and a detailed evaluation of the operational practices of 16 energy companies.
Overall, Ovo remains focused on innovation, long-term investments in the energy sector, and providing quality service to its customers.