Shell to pay out more than £500k for charging thousands of customers more than energy price cap allows

25 August 2022, 07:59 | Updated: 25 August 2022, 08:45

Shell will pay out more than half a million after charging thousands of customers more than the agreed energy price cap.

Energy regulator Ofgem said the company had overcharged 11,275 pre-payment customers by a total of £106,000.

It comes as energy bills are crippling families across the UK as the price cap continues to rise.

Shell is set to repay the amount overcharged as well as an extra total of £30,970 in goodwill payments to the customers and put £400,000 towards a fund run by the regulator.

Customers were overcharged between 2019, when the cap was first introduced, and 2022. They are being refunded an average of £9.40 each.

Forecasts for 2023 show that, by April, the price cap will hit £5,341.08 per year.

Read more: Brits must endure high energy bills at hands of Putin while Ukrainians 'pay in blood', says Boris Johnson

Read more: Energy bills forecast to skyrocket to more than £5,300 a year in April's price cap

Minister: We don't foresee energy rationing

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

It has since corrected the issue for most customers, but those who have not topped up their gas meters since March will not have seen the fix come through yet.

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 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."

Minister explains who will get £150 cost of living payment

It is not the first time Shell has faced issues with the price cap after operational problems meant that not all pre-payment meters were updated with the revised price cap levels.

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 the company reported the problem itself and fixed it, Ofgem said it would not take "formal enforcement action on this occasion".

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

GP explains why energy bill plan is a 'non-starter'

As fears grow over spiralling energy costs, British Gas has announced that it will donate 10% of its energy profits to its poorest consumers.

Some £12m of profits has already been pledged to the scheme ahead of the winter months and a further 10% will go towards it every six months for as long as the crisis lasts.

Energy companies have faced increased fury from Brits after it was revealed that several had seen huge profits as a result of steeper prices for oil and gas.

There have been calls for earnings to be passed on to consumers voluntarily or though measures like windfall taxes, which the government has been against amid concerns it could deter investment.

Speaking about the crisis on a trip to Ukraine, caretaker PM Boris Johnson said the UK must "stay the course" of soaring bills and "keep going" because it is the price for "the evils of Vladimir Putin".