Ovo Energy to cut 1,700 jobs as UK gas crisis bites

The UK’s third-biggest gas supplier will reduce its workforce by a quarter as it grapples with soaring costs

Ovo Energy is set to cut its workforce by 1,700 as it grapples with soaring wholesale gas prices. Photographer: Francesca Volpi / Bloomberg

Ovo Energy is set to announce it will cut about 1,700 jobs as it tries to cut costs amid one of the biggest crises to hit the market.

Surging gas and power prices have caused 24 firms to fold and now the UK’s third-largest energy supplier is expected to reduce its workforce by around a quarter.

Earlier this week Ovo caused outrage after it told customers they could save on heating bills by turning to other methods to keep warm, such as cuddling a pet, eating porridge and doing star jumps.

MPs branded the advice “insensitive” and the firm was forced to apologise.

The company bought the retail business of SSE Plc with 3.5 million accounts, a deal completed two years ago. The process to transfer the customers has been ongoing since.

Firms have had to deal with rising prices of wholesale gas over the past few months and many say they are being prevented from balancing the books by the energy price cap.

The figure set by Ofgem, the government’s regulator for the gas and electricity markets, is designed to protect customers and is the maximum an average customer in the UK can be charged per year for the amount of gas and electricity they use.

A review of the cap is set to be announced on February 7 and experts have warned customers may have to pay as much as 51 per cent more on their gas bills.

The changes, which will take effect from April 1, could see British households faced with an £18 billion spike in energy bills.

Chris O’Shea, chief executive officer of Britain’s biggest energy supplier, Centrica Plc, said gas prices could remain high for up to two years.

The increasing wholesale gas prices are fuelled by a rising demand and reduced imports to Europe.

The government is in talks with energy companies to try to soften the blow for households already contending with the rising cost of everything from food to fuel.

Earlier this week, Ovo emailed customers a link to a blog that included 10 tips on how to save on energy bills and keep warm in the colder months.

People were advised to hug their pets and loved ones, put on extra layers, avoid alcohol, keep ovens open after cooking, eat ginger but avoid chilli “as it makes you sweat”.

Darren Jones, a Labour MP and chairman of the business select committee, was among the lawmakers to hit out at the firm for its “insensitive” advice to customers.

Ovo apologised and said it was “embarrassed” to have issued “poorly judged and unhelpful” guidance.

Ovo is expected to announce the job cuts to its 6,200-strong workforce on Tuesday, according to a source.

Sky News first reported the cutbacks.