Ovo, a major energy supplier in the UK with around four million customers, is facing uncertainty regarding its future due to failing to meet a financial buffer requirement. The company has acknowledged this issue and is working on a plan with the regulatory body Ofgem to address the shortfall. However, there is uncertainty surrounding the timeline for meeting this target, raising concerns about Ovo’s ability to sustain its operations.
The energy industry has been facing challenges, with nearly 30 domestic suppliers collapsing following a surge in wholesale gas prices triggered by Russia’s invasion of Ukraine in 2021. To prevent further disruptions, Ofgem has implemented new financial buffers effective since April to mitigate market shocks.
Recent reports have pointed out that Ovo was the only major supplier that did not confirm if it had achieved the required financial resilience target. Chris O’Shea, the CEO of Centrica, which owns British Gas, criticized competitors who failed to meet these targets, suggesting that they should be restricted from acquiring new customers.
Ovo, established in 2009 by Stephen Fitzpatrick, has experienced a significant financial shift, moving from a substantial profit to a loss in the past year. Despite the financial challenges, the company remains committed to its core business and investments in customer service and sustainability initiatives.
In response to concerns about its financial stability, an Ovo spokesperson emphasized that the company is well-funded with support from long-standing shareholders and ongoing financial backing from entities like Shell. They clarified that the capital adequacy requirements are new to all suppliers and do not reflect Ovo’s ability to serve its customers effectively.
A consumer group survey conducted by Which? ranked Ovo poorly for customer service, placing it at the bottom alongside So Energy and British Gas. The survey involved feedback from 12,000 Which? members and evaluated the internal practices and policies of 16 energy companies.
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