Major Job Cuts Loom at Ovo Energy
One of Britain's leading domestic energy suppliers, Ovo Energy, is preparing to axe hundreds of jobs as early as next Wednesday in a dramatic effort to convince regulators and investors about its viability. The company, which serves approximately four million customers across the UK, is finalising plans to cut "several hundred" positions in a move expected to save millions of pounds in operational costs.
Restructuring Under Regulatory Pressure
The redundancies form part of a revised business plan submitted to Ofgem, the energy watchdog, which focuses on restoring the company's profitability. According to industry sources, the plan likely includes restrictions on accepting new customers while Ovo works to place its finances on a sustainable footing. The precise scale of the job losses remains undetermined, with a company spokeswoman declining to specify exact numbers or detail the size of Ovo's current workforce.
The cuts come less than a month after Ovo's chief executive, David Buttress, stepped down amid an ongoing search for investors willing to inject hundreds of millions of pounds into the struggling company. Mr Buttress, the former Just Eat chief who briefly served as Boris Johnson's cost-of-living tsar, has been replaced by Chris Houghton, a former Ovo boss who previously worked alongside founder Stephen Fitzpatrick.
Investment Challenges and Regulatory Hurdles
Ovo's quest to raise approximately £300 million in new equity has been ongoing for months, with bankers at Rothschild engaging in talks with numerous financial investors. However, the company has faced significant setbacks, including the recent withdrawal of Norwegian investment group Verdane from negotiations. The Oslo-based firm had been in detailed discussions as recently as this month about injecting substantial funds in return for a large stake in the business.
Investor uncertainty has been heightened by Ofgem's capital adequacy rules, with Ovo acknowledging recently that it - alongside larger rival Octopus Energy - had yet to fully comply with the regime. The company stated: "We have taken proactive measures to align with Ofgem's new capital rules, working constructively to meet the requirements." Sky News reported that Ovo is not technically in breach of the capital adequacy regime because it had agreed a route with Ofgem to fulfilling its obligations.
The company disclosed in recently published accounts that there was "material uncertainty" over its future, highlighting the seriousness of its financial position. Ovo has separately engaged advisers at Arma Partners to explore the sale of a stake in Kaluza, its software arm, mirroring a similar move by Octopus Energy's Kraken division.
Ovo's transformational moment came in 2020 when it acquired the retail supply arm of SSE, instantly establishing itself as one of Britain's leading energy companies. However, its growth has been marred by difficulties, particularly concerning its challenged relationship with Ofgem and numerous customer complaints about overcharging.
The company's customer base places it behind Octopus Energy and Centrica-owned British Gas in the household energy supply market, yet it remains a significant player in the UK energy sector. Former Virgin Money chief Dame Jayne-Anne Gadhia was recently named chair of Ovo's retail energy arm, adding experienced leadership during this critical period.
