Coronavirus halts OVO Energy's growth
OVO Energy, which recently became the UK’s second-biggest energy provider, has been forced to furlough 3,400 of its employees as a result of uncertainty relating to the Coronavirus outbreak.
Now, more than ever, it’s important to get access to reliable information. For information about COVID-19, see the gov.uk website, and for how it affects the energy industry the most reliable updates will come from Ofgem.
What will happen to OVO staff?
The decision to furlough - in other words, to temporarily lay off - workers was taken following consultation with the relevant unions in order to give the workers some certainty about what will happen to them in the months to come.
They will receive the 80% of their salary up to £2,500 per month promised by the government under its Coronavirus Job Retention Scheme, and OVO has promised to cover the added cost above the cap where it applies. The company team of executives and senior directors has also taken a 20% salary reduction for the next three months, donating this money to those affected by COVID-19.
This news comes as all non-key businesses halt their services in line with advice from the government designed to fight the spread of Coronavirus. The workers affected by the move are those who work for OVO and SSE Energy in customers’ homes, installing gas meters and taking meter readings.
OVO has said that its customer service team is unaffected by this change and will continue to address its customers’ queries in the same way.
The importance of staying indoors and isolating ourselves from those who don’t live with us has meant that these services can no longer go on in the same way, and so furloughing staff was seen as the best option.
Who are OVO Energy?
OVO began life as an independent energy provider in 2009, gaining traction early on because of its focus on green energy and smart technologies. It has come a long way from its humble beginnings, beginning this year as one of Britain’s largest energy providers, second only to British Gas.
Its growth has sped up in recent years with the takeover of a number of its competitors. First it ate up fellow independent providers Boost and Spark Energy, and in December 2019 the Competition and Markets Authority (CMA) approved its £500m takeover of SSE, which more than tripled its customer base to 5 million households.
No sooner had OVO become one of the country’s biggest suppliers, than the COVID-19 outbreak has resulted in a total halt across the vast majority of services and forced it into furloughing more than 3,000 employees.
Like all other energy providers, the increase OVO has seen in residential usage - which could see customers’ bills rise by up to £200 - has been outstripped by plummeting demand in the business sector, whose energy needs are much greater than those of residential customers. Early figures have indicated that the effect of COVID-19 on the energy industry has meant that the country’s usage has fallen by around 7%.
As are all businesses affected by the Coronavirus, OVO and its employees will be hoping for a swift return to normality to minimise the financial burden brought on widespread temporary closures and the cessation of non-essential activities.
Centrica also affected
Centrica, which owns British Gas, now the only provider bigger the OVO, has also been forced to update its plans before the weekend in response to COVID-19. It announced the following measures:
- The cancellation of bonus payouts to management.
- A halt in its dividend payments.
- The postponement of its sale of Spirit Energy.
Its service engineers continue to attend to breakdowns but, as in all other industries, all non-essential customer visits have been forced to stop for the time being.
The above measures are just a few of those being taken by Centrica to “maintain a strong balance sheet” as it, like all its competitors, expects to see its revenues take a sizeable hit in the months to come.