"These discussions are continuing, however no final decisions have been taken and no agreements regarding the terms of any transaction have been entered into," SSE said in a statement, which did not give financial details from the talks.
"The board remains focussed on securing the best long-term future for the business, its customers and employees, and for shareholders."
OVO is already the largest independent energy supplier in Britain with more than 1.5 million customers.
The talks were first reported by Sky News, which said SSE and OVO have been in discussions for months about a deal that was likely to cost OVO "several hundred million pounds".
Earlier this year, Sky News reported that SSE had approached companies including broadband provider TalkTalk Telecom Group about a deal to shed its retail arm. In December, SSE and energy group Innogy SE scrapped plans to merge their British retail operations after the industry regulator proposed a cap on consumer bills, leaving them looking for other consolidation options.
(Reporting by Michael Holden in London and Kanishka Singh in Bengaluru; editing by Jonathan Oatis)