Accounts for energy supplier Ovo revealed ‘significant doubts’ over their ability to ‘continue as a going concern’ – though the company insists it is business as normal
One of the UK’s biggest energy suppliers have warned of “uncertainty” about its future after missing a financial buffer rule.
Accounts for Ovo, which has around four million customers, say it has agreed a plan with regulator Ofgem to meet the target. But it admitted there was “uncertainty” around the timing,” according to The Times. “This creates a material uncertainty which may cast significant doubt on the group’s ability to continue as a going concern,” it adds.
Nearly 30 domestic suppliers collapsed when wholesale gas prices soared in the wake of Russia’s invasion of Ukraine in 2021. The mass failures cost hundreds of millions of pounds added to the customer bills of all surviving firms. In response, Ofgem has set new financial buffers – which came into force this April – designed to “absorb severe but plausible market shocks“.
Reports in April claimed that Ovo was the only big supplier that refused to say whether it had hit the target.
Chris O’Shea, boss of British Gas owner Centrica, has previously slammed rivals that have not met the financial resilience targets, saying they should be blocked from taking on new customers.
Mr O’Shea said it was “outrageous” and “criminal” that regulator Ofgem was, in his view, failing to impose its own rules designed to reduce the risk of suppliers going bust.
Ovo was founded in 2009 by entrepreneur Stephen Fitzpatrick, who still owns almost half of the company’s shares, alongside Mayfair Equity Partners and Mitsubishi.
The accounts show Ovo swung from a more than £1billion profit in 2023 to a loss of £167million last year. Underlying profits fell to £42million, from £225 million in 2023. It added: “The core business remains strong and we’re continuing to invest in our customers and the green transition.”
An OVO spokesperson insisted: “OVO is a fully funded entity backed by longstanding shareholders and with ongoing facilities from the likes of Shell. Capital adequacy requirements are new, and all suppliers are working with them for the first time.
“This is not a reflection on our ability to serve our customers or on performance this year and we will continue to focus on bringing innovation and long term investment to the sector”
A survey consumer group Which? ranked Ovo joint bottom place with So Energy and British Gas for customer service. The poll took place among nearly 12,000 Which? members during last September and October. The group also carried out an in-depth assessment of 16 energy companies’ ” behind-the-scenes practices and policies.