Shell Energy to pay £500,000 after overcharging thousands of price cap customers

Shell Energy is to pay more than £500,000 after overcharging thousands of customers for their gas and electricity since the energy price cap was put in place over three years ago.

The business will be forced to return £106,000 to the 11,275 households it has been overcharging since January 2019, regulator Ofgem revealed.

It will also pay out an extra £30,970 in goodwill payments to the affected customers and contribute £400,000 towards a support fund run by the regulator.

Ofgem said the customers, who all have pre-payment meters, had been overcharged between January 2019 and September 2022.

Shell reported the problems to Ofgem itself after it discovered them in March 2022.

It has since corrected the issue for most customers. However those who have not topped up their gas meters since March 2022 will not have seen the fix come through yet. It will be implemented when they next top up.

They are being refunded £9.40 on average.

Ofgem director of retail Neil Lawrence 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.”

Shell had apparently run into operational problems which meant that not all pre-payment meters were updated with the revised price cap levels when the cap changed twice a year.

Pre-payment households are often considered by energy experts to be the most vulnerable on a supplier’s books.

It is not Shell Energy’s first problem with the price cap. Between January and March 2019 the company overcharged 12,000 households by more than £100,000 in total.

It agreed to pay £390,000 at the time to make up for the problems. Because Shell Energy reported the problem itself and has fixed the problem, Ofgem said it would not take “formal enforcement action on this occasion”.

Mr Lawrence said: “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.”

Shell Energy said: “We’re sincerely sorry that errors updating our prepayment meter rates resulted in some customers being overcharged for a period of time.

“As soon as we identified the issue we began taking steps to put it right, and self-reported it to Ofgem.

“The overcharge, which averages £9.40 per customer, will be refunded along with a gesture of goodwill. We will be writing to customers to let them know.”