Shell Energy Retail Limited is to refund and compensate 11,275 prepayment customer accounts it has overcharged on its default tariffs. The total amount of customer detriment to be refunded is £106,000. Refunds will be issued automatically to affected customers.
In addition, the supplier will pay £400,000 to Ofgem’s voluntary consumer redress fund and £30,970 in goodwill payments to affected customers, equating to a total payment of £536,970.
In March 2022, Shell Energy Retail Limited discovered that due to operational errors with the implementation of its default tariffs it had overcharged 11,275 prepayment customers for periods of time between January 2019 and September 2022. Tariff updates were sent to prepayment meters to amend rates in response to changes in the level of the price cap, but due to a variety of operational issues, not all meters were successfully updated to the revised rates. The result of this issue was that over 11,000 prepayment customers paid above the rates allowed under the price cap at the time. The average amount being refunded to affected customers is £9.40
Suppliers must be vigilant and ensure that all customers, particularly those who may be in vulnerable circumstances, are protected by the cap. Where issues are identified, we expect suppliers to act quickly to resolve any overcharge and to engage Ofgem on the steps they are taking to put things right. In determining this redress package, we have considered the additional financial hardship that this issue may have placed on prepayment customers, especially when energy prices are at historic high levels. We have also considered past compliance with the price cap, noting that in 2019 Shell Energy Retail Limited agreed to refund and compensate 12,000 customer accounts it overcharged when the price cap was introduced (trading as First Utility at the time of breach).
However, whilst this issue represents a serious matter, taking into account that Shell Energy Retail Limited self-reported the issue and has put in place steps to address the failings, Ofgem has decided not to take formal enforcement action on this occasion. Had Shell Energy Retail Limited not self-reported the issue and resolved in a timely manner – the redress package sought would have been considerably higher.
Neil Lawrence, Director of Retail, Ofgem said “Ofgem expects suppliers to adhere to the terms of contracts they have with customers, particularly ensuring they pay no more than the level of the price cap. Households across Britain are already struggling with rising energy bills and living costs. Overcharging by suppliers can cause additional and unnecessary stress and worry at what is already a very challenging time for consumers across the UK. Ofgem is always prepared to work with suppliers who have failed to comply with their obligations, but who have self-reported and are determined to put things right, as Shell has done here. The contributions Shell has made to the redress fund will help to support vulnerable consumers with their energy bills.”
Ofgem closely monitors all suppliers’ approaches to the implementation of the cap and will continue to hold suppliers to account if they do not meet their obligations.
Notes to editors:
- Around 24 million households are protected by the default tariff cap, which came into effect on 1 January 2019.
- Details of Shell Energy Retail’s first overcharging offence can be found here.
- Ofgem’s Redress Fund is operated on its behalf by the Energy Saving Trust and allows companies to pay a sum of money to appropriate charities, trusts, organisations or consumers as a result of breaches of licence conditions. Information on the Energy Saving Trust can be found here.
- More information on the default tariff cap can be found on our website.