One of the major energy providers in the UK is facing uncertainty about its future due to not meeting a key financial requirement. Ovo, with approximately four million customers, has acknowledged the issue and is working with the regulatory body Ofgem to address it. The company’s accounts suggest potential doubts about its ongoing operations, emphasizing the need to meet the specified financial target.
Following the significant disruptions in the energy market caused by the surge in wholesale gas prices following Russia’s invasion of Ukraine in 2021, nearly 30 domestic energy suppliers collapsed. This led to substantial financial burdens being passed on to customers of surviving companies. In response, Ofgem introduced new financial safeguards in April to mitigate potential market shocks.
Recent reports indicated that Ovo was the lone major supplier that did not confirm compliance with the new financial requirements. Chris O’Shea, the CEO of Centrica, the parent company of British Gas, criticized competitors who failed to meet the financial resilience standards, suggesting they should be prevented from accepting new customers. He expressed frustration with Ofgem for not enforcing its own regulations aimed at reducing the risk of supplier insolvency.
Founded in 2009 by entrepreneur Stephen Fitzpatrick, Ovo has faced a significant financial swing, transitioning from over £1 billion in profits in 2023 to a £167 million loss last year. Despite the financial challenges, the company remains committed to its core operations and investments in customer service and sustainability initiatives.
An Ovo spokesperson reassured stakeholders that the company is well-funded with support from long-standing shareholders and financial partners like Shell. They highlighted that the new capital adequacy requirements are a recent development, and all energy suppliers are adapting to these changes for the first time.
In a consumer survey conducted by Which?, Ovo was rated poorly for customer service, sharing the bottom position with So Energy and British Gas. The assessment involved feedback from nearly 12,000 consumers and an in-depth evaluation of operational practices among 16 energy companies.
Overall, Ovo remains focused on innovation and sustainable growth in the energy sector, despite the financial challenges and regulatory scrutiny it currently faces.