Ovo responds to energy crisis with move to cut quarter of workforce

Ovo Energy, the UK’s third-biggest gas and electricity supplier, is to cut a quarter of its workforce as part of a restructuring aimed at saving costs amid the deepening industry crisis.

Sky News has learnt that Ovo could announce details of its plans as soon as Thursday, with roughly 1,700 out of 6,200 roles expected to be lost as part of a voluntary redundancy programme.

The announcement will come during a difficult week for the company, which provoked anger when it sent an apparently light-hearted email to customers this week recommending that they perform star-jumps or cuddle their pet to keep warm during the winter months.

Stephen Fitzpatrick, Ovo’s founder and chief executive, was nevertheless praised on social media for the sincerity of an apology he made for the communication.

One source said Ovo’s announcement of the redundancy programme would be accompanied by a commitment to increase minimum pay across the company to £12-an-hour, and to “reshore” all customer-facing jobs to the UK.

It also plans to open a new academy in Glasgow, and to close a number of its sites as part of a consolidation to three locations in London, Bristol and Glasgow.

Ovo has grown from scratch since it was set up by Mr Fitzpatrick in 2009, but was transformed by the acquisition of SSE’s retail customer base two years ago.

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Since the SSE acquisition, Ovo’s integration plan has accelerated, and it is now migrating 120,000 customers each week to its own automated operating platform.

Ovo’s greater automation means it requires fewer staff to run it, according to one industry insider.

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It considered a bid for Bulb, the energy supplier which collapsed late last year, prior to it being placed into a form of insolvency, and could yet emerge as a contender to take on its roughly 1.6 million customers.

Ovo has about 4.5 million UK customers, making it the third-biggest player behind Centrica’s British Gas and E.ON Next, the new brand which combines customers from E.ON and npower.

Ovo counts Mitsubishi, the Japanese industrial group, among its backers, and previously explored a deal to raise funding from a division of Goldman Sachs, the Wall Street bank.

Mr Fitzpatrick has been a vocal critic of government energy policy during the current crisis, saying that ministers were showing “nowhere near enough urgency” in trying to tackle the crisis, which has largely been sparked by soaring wholesale gas prices.

Since August, 25 suppliers have ceased trading, while Bulb has continued to trade, albeit under the temporary ownership of the government.

Together Energy, which is 50%-owned by Warrington Borough Council, is expected to fall into administration within days, adding further to the tally of industry casualties.

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The demise of Together would put more than £50m of local taxpayers’ money at risk.

Other than the pressure he is facing over breaches of lockdown rules, Boris Johnson’s biggest priority has become navigating a route through rising consumer prices which threaten his premiership.

Ofgem, the industry regulator, is due to announce a revised annual price cap next month amid forecasts that it may soar to £2000 or more.

Some suppliers have been pleading with the government to remove the industry price cap altogether, an idea which has been dismissed by the business secretary, Kwasi Kwarteng.

Mr Kwarteng has been holding regular talks with industry executives in recent weeks, although new measures are not expected to be agreed for weeks.

Ovo declined to comment on Wednesday.

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