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Ovo Energy has cast doubt on its future as one of Great Britain’s largest domestic gas and electricity suppliers after failing to meet the regulator’s financial standards.
The company, founded by the green energy entrepreneur Stephen Fitzpatrick, said in its latest financial accounts, seen by the Guardian, that there was “uncertainty” around the plan it had agreed with the regulator to improve its capital position.
“This creates a material uncertainty which may cast significant doubt on the group’s and company’s ability to continue as a going concern,” it added.
Ovo, which supplies about 4m homes, is one of three suppliers that have failed to meet new financial resilience standards put in place after the energy crisis caused dozens of firms to collapse.
It and Octopus Energy have confirmed they have missed the target and have agreed a transition plan with the regulator for Great Britain, Ofgem, to meet the new standards. The third supplier has not been named but is understood to be one of the smaller players in the market.
Octopus Energy said earlier this year that it was “fully compliant with Ofgem’s new financial resilience rules” and had a “greater capacity to absorb shocks than many longer-established companies” in part due to the backing of “amongst the largest and most respected funds in the world”.
An Ovo spokesperson said the company was a “fully funded entity backed by longstanding shareholders and with ongoing facilities”, adding: “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.”
The warning about the timing and extent of the implementation of Ovo’s capitalisation plan, first reported by the Times, appears in accounts lodged with Companies House but not yet publicly available.
Fitzpatrick, who now owns London’s Kensington Roof Gardens, is reportedly in talks to secure the future of the business by selling new shares in the company to raise up to £300m, according to Sky News. The report said Fitzpatrick was also in early talks with Scottish Power over a possible deal to merge their supply businesses.
Ovo and Scottish Power declined to comment on the talks.
