Energy giant OVO has reassured customers amid a stark warning of “uncertainty” about its future after failing to meet regulator standards.
OVO, which supplies around four million homes, is one of three suppliers that failed to meet Ofgem’s new financial resilience targets. While the supplier stated that it has agreed a plan with Ofgem to meet the new requirements, it admitted to “uncertainty” regarding whether it will be able to improve its capital position. According to The Times, it said in its latest financial accounts: “This creates a material uncertainty which may cast significant doubt on the group’s and company’s ability to continue as a going concern.”
However, the energy supplier has since released a statement reassuring customers of its position.
An OVO spokesperson said: “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.”
They added: “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.”
Ofgem set new resilience rules this year to ensure providers do not take unnecessary financial risks. Some of the requirements include having a minimum amount of financial buffer to remain resilient to changes in the energy market, as well as putting their own capital at risk and making sure they are not relying on their customers’ money to fund their business.
The move aims to build “a resilient market that attracts long-term investment” that will benefit consumers.
Octopus Energy and a smaller provider, which has not been named, are the two remaining companies that failed to meet Ofgem’s new targets by the April 1 deadline.
Octopus released a statement earlier this year when the news first surfaced, acknowledging this. However, it stated that it has an approved plan with Ofgem.
It added: “We fully comply with Ofgem’s rules and our resilience meant we not only thrived through the energy crisis but bailed out Bulb – saving British billpayers billions.”
