OVO Energy is preparing to cut hundreds of jobs next week as the company attempts to reassure regulators that it has a credible plan to stabilise its finances and return to profitability.
The move marks one of the most significant workforce reductions by a major UK energy supplier in recent years.
The company, which provides gas and electricity to around four million households across Britain, is finalising proposals that could see redundancies implemented as early as Wednesday. The job cuts form part of a revised business plan submitted to Ofgem, aimed at reducing operating costs and securing the company’s long-term viability.
Industry sources suggest the updated plan could also include temporary limits on taking on new customers while OVO focuses on strengthening its financial position. One insider indicated that “several hundred” roles may be cut, though a company spokeswoman did not disclose the scale of the planned reductions or the size of the current workforce.
The expected layoffs come shortly after the departure of former chief executive David Buttress, who stepped down less than a month ago amid ongoing efforts to attract major new investment. Buttress, previously a senior figure at Just Eat and briefly a government cost-of-living adviser, has been replaced by Chris Houghton, a former OVO executive who previously worked alongside founder Stephen Fitzpatrick.
OVO has also appointed Dame Jayne-Anne Gadhia, the former Virgin Money chief, as chair of its retail energy division as the firm seeks fresh leadership during a turbulent period.
The supplier remains one of the UK energy market’s largest players, sitting behind Octopus Energy and British Gas in household market share. However, the company has faced significant challenges in securing fresh capital. Its pursuit of about £300m in new equity has stretched on for months, with bankers from Rothschild opening discussions with multiple potential investors.
Last month, a Norwegian investment group withdrew from talks over concerns about the UK’s regulatory environment, which some investors believe is deterring much-needed new funding. Verdane, based in Oslo, had been in advanced negotiations earlier this year, while Iberdrola, the parent company of Scottish Power, also explored a potential partnership.
Investor confidence has been unsettled further by Ofgem’s capital adequacy rules, which require suppliers to maintain stronger financial buffers. OVO recently acknowledged that it had not yet fully met these requirements, stating: “We have taken proactive measures to align with Ofgem’s new capital rules, working constructively to meet the requirements.” Sky News reported that the firm was not formally in breach of the regime because it had agreed a pathway to compliance.
In recently published accounts, OVO disclosed that there was “material uncertainty” surrounding its future, underscoring the urgency of its restructuring efforts. The company has also hired advisers from Arma Partners to assess the potential sale of a stake in Kaluza, its technology platform, mirroring a similar move by Octopus Energy’s Kraken division.
Alongside founder Stephen Fitzpatrick, a number of prominent investors are backing the company, including Mitsubishi and Mayfair Equity Partners, with Morgan Stanley Investment Management also holding a stake.
OVO, founded in 2009 as a challenger brand promoting stronger customer service, rose rapidly through the market. Its major breakthrough came in 2020, when it acquired SSE’s retail energy arm, elevating it to the top tier of UK suppliers overnight. However, the company has faced ongoing difficulties, particularly in meeting regulatory expectations and handling a surge in customer complaints about billing and overcharging.
