Mon. Jan 24th, 2022

Ovo Energy, Britain’s third largest energy retailer, will lay off a quarter of its workforce as part of a cost saving as the energy crisis puts the remaining suppliers under severe pressure.

The loss-making group, founded in 2009 by former City trader Stephen Fitzpatrick, is expected to announce a layoff program on Thursday that would remove about 1,700 roles from a total workforce of 6,200, according to a person who familiar with the matter.

Ovo was driven into the top tier of energy suppliers at the beginning of 2020 when it launched a £ 500 million acquisition of SSE’s UK electricity and gas retail arm.

It 2,600 roles lost in 2020, and said at the time that the coronavirus pandemic had forced it to accelerate the integration of the SSE business. As customers were transferred from the SSE business to Ovo’s IT platform, fewer staff were needed.

The new job cuts are likely to raise concerns about the financial health of Britain’s remaining energy suppliers, who have come under intense pressure from rising wholesale and gas prices. More than 26 competing companies have failed in the past five months. The largest, Bulb Energy, is backed by a £ 1.7bn taxpayer loan.

While many of the failures so far have been attributed to poor business practices and a failure to properly hedge wholesale price volatility, energy industry executives have warned that the crisis is now hurting well-run companies as there could be a multi-million pound gap between their households under Britain ‘s energy price limit and the actual cost of buying energy to serve customers.

The remaining suppliers have called on ministers to ease pressure on both the sector and households.

Fitzpatrick has so far been highly critical of ministers’ lack of action and warned last month that politicians and energy regulator Ofgem “have failed to understand how serious the situation is”.

In addition to the job cuts, Ovo is also expected to announce a commitment to increase the group’s minimum wage. The company hopes to eliminate those posts as part of a voluntary redundancy program.

Ovo was earlier this week forced to apologize after the Financial Times reported that he had sent an email to SSE Energy Services customers with tips such as making star jumps, cuddling pets and eating porridge to help them reduce their energy bills. Ovo said it was “embarrassed” and “sincerely” apologized for the tips.

News of the job cuts was first reported by Sky News.

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