One of the largest energy providers in the UK has expressed concerns about its future following a breach of a financial security requirement. Ovo, serving approximately four million customers, disclosed that it has reached an agreement with the regulatory body Ofgem to address the shortfall. However, there remains uncertainty surrounding the timeline, potentially impacting the company’s ongoing viability.
The energy sector faced significant turmoil in 2021, with nearly 30 domestic suppliers collapsing due to surging wholesale gas prices triggered by geopolitical events, such as Russia’s invasion of Ukraine. Ofgem responded by implementing new financial safeguards in April to mitigate market shocks effectively.
Recent reports indicated that Ovo was the sole major supplier that did not confirm compliance with the financial resilience criteria. Chris O’Shea, the head of Centrica, which owns British Gas, criticized competitors failing to meet these targets, suggesting that they should be restricted from acquiring new customers. O’Shea condemned Ofgem for allegedly not enforcing rules aimed at preventing supplier insolvencies.
Established in 2009 by Stephen Fitzpatrick, Ovo experienced a significant financial swing, transitioning from over £1 billion in profit to a £167 million loss in the previous year. Despite this setback, the company emphasized its strong core operations and commitment to customer service and sustainability efforts.
An Ovo representative asserted that the company is well-funded with support from longstanding shareholders and financial facilities from entities like Shell. The spokesperson clarified that the newly introduced capital requirements are a collective challenge for all suppliers, underscoring Ovo’s dedication to customer service and innovation.
A survey by consumer group Which? ranked Ovo alongside So Energy and British Gas at the bottom for customer service satisfaction. The assessment, based on feedback from nearly 12,000 Which? members, also delved into the operational practices of 16 energy companies.
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