It is claimed the two companies have ‘accelerated talks in recent weeks’ although it is not clear yet how likely an eventual deal could be
Energy bills are set to rise again this July(Image: GETTY)
E.ON is reported to be plotting a merger with rival OVO Energy in what would see them become the largest supplier.
Sky News claims the two companies have “accelerated talks in recent weeks” although it is not clear yet how likely it is to result in a deal.
If a takeover does get announced, it would create a group with a larger customer base than British Gas and Octopus Energy.
The news website reports that EDF Energy and Telecom Plus have also expressed interest in OVO Energy, which has been exploring options to raise capital or sell its retail business.
It is unclear if the OVO Energy brand would remain, should the company get taken over.
E.ON has about 5.7 million customers, and OVO has around 4 million. OVO Energy declined to comment when contacted by the Mirror. E.ON has been contacted for comment.
British Gas was last year overtaken by rival Octopus Energy as the UK’s largest household energy supplier. This week, Octopus said it had surpassed 8 million UK customers.
It comes as energy bills are predicted to soar this July due to the Iran war, with analysts at Cornwall Insight forecasting the price cap could rise to £1,837 a year.
In early March, it had warned that annual household energy bills could surge by £332 to £1,973 from July when the next cap comes into effect.
The lower than previously forecast rise signals some easing back in wholesale energy costs since the start of the war on February 28.
The price cap is currently set at £1,641 a year, with Ofgem set to announce its July price cap level by May 27.
The Government has said it will look at further targeted support as part of contingency planning efforts.
Earlier this week, the Government also extended upcoming electricity bill support to 10,000 firms, which will offer some respite to companies, given they are not covered by the household energy price cap.
Wholesale energy costs are not seen coming back down to pre-war levels until the Strait of Hormuz, through which a fifth of the world’s oil and seaborn gas is carried, is reopened.
Its blockage and the disruption to supply, combined with attacks and stoppages at energy infrastructure across the Middle East, has sent gas prices soaring and the cost of crude surging as high as $120 a barrel.
