Ovo is the third-largest household supplier behind Octopus Energy and British Gas
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Ovo Energy is drawing up plans to cut hundreds of jobs in a bid to convince regulators that it has a credible route back to financial stability.
The supplier, one of Britain’s largest, serving around four million households, is expected to announce the redundancies as early as Wednesday, Sky News reports.
The precise number of job losses is not yet clear, but one insider suggested “several hundred” roles could go.
The planned cuts form part of a revised business plan submitted to regulator Ofgem, which is focused on strengthening profitability.
Industry sources say the proposals are also likely to include restrictions on taking on new customers while the company works to place its finances on firmer ground.
A spokeswoman for Ovo declined to comment on the size of the cuts or the scale of its current workforce.
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The move comes less than a month after chief executive David Buttress stepped down during an ongoing effort to attract new investors willing to inject hundreds of millions of pounds into the company.
Mr Buttress, the former Just Eat boss and Boris Johnson’s short-lived cost-of-living tsar, has been replaced by Chris Houghton, a former Ovo executive who previously worked alongside founder Stephen Fitzpatrick.
Former Virgin Money chief Dame Jayne-Anne Gadhia has also been appointed chair of the company’s retail energy arm.
Ovo is the third-largest household supplier behind Octopus Energy and British Gas.
The business has spent months trying to raise roughly £300m in new equity, with advisers at Rothschild speaking to multiple potential backers.
Last month, Sky News revealed that Norwegian investment group Verdane had walked away from discussions over concerns about the sector’s regulatory environment.
The group had been in detailed talks about injecting a substantial sum into Ovo in exchange for a large stake.
Iberdrola – owner of Scottish Power – has also held early-stage discussions about a possible tie-up.
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Investor caution has been exacerbated by Ofgem’s capital adequacy rules, with Ovo admitting recently that it, like larger rival Octopus, had not yet fully met the requirements.
Ovo said: “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 rules because it has agreed a pathway with Ofgem to meet its obligations.
Ovo, backed by shareholders including Mitsubishi and Mayfair Equity Partners, has disclosed in recent accounts that there is “material uncertainty” about its future.
It has also hired advisers at Arma Partners to explore selling a stake in Kaluza, its software division – mirroring a similar approach taken by Octopus Energy with its Kraken platform.
Founded in 2009 as a challenger brand promising better service than the big established suppliers, Ovo underwent a major transformation in 2020 when it took over SSE’s household supply arm, becoming one of the UK’s dominant players overnight.
However, its rise has been marked by tensions with Ofgem and heavy criticism from customers over billing problems and overcharging.
LBC has contacted Ovo for comment.