- Video report by ITV News Consumer Editor Chris Choi
Big Six energy provider SSE has agreed to sell its struggling household supply arm to smaller rival Ovo Group in a £500 million deal.
The move will turn Ovo into one of the UK’s largest energy suppliers overnight, second to British Gas, having only been founded 10 years ago.
Ovo is currently the UK's largest independent energy supplier, with 1.5 million customers and about 2,000 employees.
Its offer to take over SSE’s energy services business comprises £400 million in cash and £100 million in loan notes and is expected to complete later this year or early next year.
SSE is the third largest supplier in the UK energy market, with around 3.5 million household customers and 8,000 staff.
The deal comes after SSE was forced to scrap its merger with Big Six rival npower last December after the Government’s energy price cap sent shockwaves through the industry.
Gas and electricity suppliers have come under intense pressure in the UK following this year’s introduction of the cap on standard variable tariffs, as well as increasing competition from a swathe of smaller players.
So what does this mean for your bills?
Nothing. In theory there would be a different logo on your printed bills as there is no interruption to supply.
Stephen Murray, energy expert at MoneySuperMarket, said the announcement will "enhance competition".
He said: "The likes of Ovo, Shell, Bulb and Octopus mean there's a base of emerging suppliers who are continuing to challenge the Big Six in the domestic energy market and can fill the void left by SSE deciding to focus on other parts of its business.
"Today's announcement will enhance the ever-growing competition for customers."
SSE chief executive Alistair Phillips-Davies said: "Ovo shares our relentless focus on customer service and has a bold vision for how technology can reshape the future of the industry.
"I’m confident that this is the best outcome for the SSE Energy Services business."
Ovo will also retain the SSE brand under licence for a period and will ensure a phased and "carefully-managed" transfer.
Stephen Fitzpatrick, founder and chief executive of Ovo, hailed the deal as a "significant moment for the energy industry".
He said: "SSE and OVO are a great fit. They share our values on sustainability and serving customers," he added.
But it comes after a difficult 12 months for SSE, which admitted on reporting its annual results recently that its wider business "fell well short" of its hopes in 2018-19 and warned 2019-20 earnings would also be hit.
The group’s annual underlying pre-tax profits fell 38% to £725.7 million.
The figures came on the back of a tough year for SSE following the collapse of its npower merger.