Ovo Energy Preparing to Launch Strike on Workforce

Ovo Energy, one of Britain’s largest domestic gas and electricity suppliers, is preparing to launch a strike on its workforce next week in a bid to convince regulators that the company has a viable turnaround plan. The company serves around four million customers across the UK and is drawing up proposals to cut hundreds of jobs to save millions of pounds in costs.

Job Cuts and Restructuring

The layoffs, the exact extent of which could not be determined, are said to be part of a revised business plan submitted to energy regulator Ofgem that focuses on increasing the company’s profitability. Industry sources say this plan is likely to include restrictions on adding new customers while putting Ovo’s finances on a sustainable footing. An insider suggested that "several hundred" jobs would be lost next week.

Leadership Changes and Investment

The redundancies come less than a month after the resignation of Ovo boss David Buttress, who is in the midst of a search for investors willing to pump hundreds of millions of pounds into the company. Mr. Buttress was replaced by Chris Houghton, a former Ovo boss who worked alongside founder Stephen Fitzpatrick. Former Virgin Money boss Dame Jayne-Anne Gadhia was recently appointed chair of Ovo’s energy retail division.

Market Position and Challenges

Ovo’s customer base puts it behind Octopus Energy and Centrica-owned British Gas in the home energy supply market, but remains one of the most important players in the sector. The drive to raise around £300m of new equity has been underway for months, with bankers in talks with numerous financial investors. Investor uncertainty has been heightened by energy regulator Ofgem’s capital adequacy rules.

Regulatory Compliance and Financial Statements

Ovo recently acknowledged that the company – along with larger rival Octopus Energy – was not yet fully compliant with Ofgem’s capital rules, saying: "We have taken proactive measures to adapt to Ofgem’s new capital rules and are working constructively to meet the requirements." The company has separately hired advisers to explore selling a stake in its software division, following a similar move by Octopus Energy’s Kraken division.

History and Growth

Founded in 2009, the company positioned itself as a challenger brand and offers first-class service to established players in the industry. The turning point for Ovo came in 2020 when it bought SSE’s retail division, transforming it overnight into one of the UK’s leading energy companies. However, growth has not been without difficulties, particularly relating to the difficult relationship with Ofgem and a flood of customer complaints about overpricing.