Ovo has recently acknowledged its failure to comply with new capital adequacy regulations set by the industry regulator.
Sky News has reported that Ovo Energy is now the second largest gas and electricity provider in the UK to be in technical default of Ofgem’s regulations implemented in March.
Octopus Energy, now surpassing British Gas as the UK’s leading household energy supplier, had previously disclosed its own non-compliance with these regulations earlier in the year.
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Last Friday, Greg Jackson, the founder and CEO of Octopus Energy, criticized the framework as «crude» in an interview with the Financial Times.
According to Ofgem’s measures, energy suppliers must maintain a specific level of cash or tangible assets on their balance sheets, with the threshold determined based on the number of customers they serve.
A recent adjustment to the regulations, excluding intangible assets from the calculation, led to several companies, including Octopus Energy and Ovo, falling short of compliance.
The capital adequacy threshold requirement is estimated to be around £115 per dual-fuel customer.
A representative for Ovo stated: «We have taken proactive steps to adhere to Ofgem’s new capital regulations, actively working to meet the criteria.»
Ovo made a significant leap in the industry by acquiring SSE’s residential supply division.
The company now boasts four million customers.
Ovo, like Octopus Energy, has a partnership with Shell, which it believes significantly bolsters its financial stability.