Profits of Ovo Energy slumped by two-thirds last year due to rising costs ahead of a crackdown on energy bills
One of the largest challengers to the Big Six energy giants has revealed a two-thirds slump in profits last year due to rising costs ahead of a crackdown on energy bills.
Ovo Energy posted its first ever profit in 2016 after seven years as the energy industryâ€™s most high profile new supplier, but its profits for 2017 fell to just a third of the year before.
Meanwhile its highest paid director, understood to be chief executive Stephen Fitzpatrick, took home a 20pc pay rise totaling Â£409,000 for last year. Fitzpatrick, a former formula one racing boss, also scooped up a Â£9,000 pension contribution from Â£8,000 the year before. The windfall emerged despite Ovoâ€™s pre-tax profits slipping to just Â£6.07m last year, after reaching Â£23.8m in 2016 in part thanks to the Â£35.8m proceeds from the sale of its smart meter business.
Ovoâ€™s profit hit has emerged ahead of the Governmentâ€™s crackdown on standard variable energy tariffs, which make up around a quarter of Ovoâ€™s 800, 00 strong customer base.
The market intervention is due this winter as wholesale energy costs march higher, lifting bills across the Big Six and its smaller rivals.
Ovo Energy customers on its standard tariff face a price hike of up to Â£135 a year after it announced its second hike of the year last month.
The firm will increase the price of its standard tariff â€“ known as the Simpler Energy tariff â€“ and remove a Â£60 online discount on the tariff from next week.
From this winter, companies will have to keep their tariffs below the Government rate which will be calculated every six months based on the cost of energy which is already around 60pc higher this year than at the same time last year.
Ovo buys its gas and power via the wholesale market through the trading desk of Royal Dutch Shell which now owns rival supplier First Utility.
Shellâ€™s new home energy arm returned to profit for 2017 with profit of Â£24m from a loss of around Â£9.5m in 2016.