Shell Energy is to refund more than £500,000 to prepayment customers it has overcharged for gas and electricity in the last three years.
Ofgem confirmed that the business will be forced to return £106,000, as well as make good will payments of £30,970 to the 11,275 affected default tariff households.
This comes as the energy regulator are to announce a new energy price cap tomorrow morning, raising the average gas and electricity bill from just under £2,000 up to £3500 annually.
Shell Energy admitted to charging customers rates above the Ofgem price cap between January 2019 and September 2022, as some meters were not updated correctly with the correct rates.
When the price cap changes, energy suppliers need to send updates to customer prepayment meters. The problem was caused by "operational issues" and Shell self-reported itself to Ofgem, reports the Mirror.
Refunds will be issued automatically to affected customers - meaning you shouldn't need to do anything to receive the cash. Shell said each customer will get roughly £9.40 back in the form of a refund, along with the compensation on top.
The energy firm will also pay £400,000 to the Ofgem voluntary consumer redress fund, which hands out money to charities, trusts, organisations and consumers and is separate to customer compensation. Shell will pay out £536,970 in total after the Ofgem ruling.
Shell had previously agreed to refund and compensate 12,000 customer accounts it overcharged in 2019 when the price cap was introduced. The company was trading as First Utility at the time of breach.
Neil Lawrence, Director of Retail at 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.”
A Shell Energy spokesperson 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.”
The news has caught the attention of customers with other energy providers, as they are concerned they may also have been overcharged.
Michael Throckmorton, Business Success Manager and Data Protection Officer at Merchant Cash Advance said: "The recent news regarding Shell energy is very alarming for many people in the UK regarding the costs of their energy bills over the last few years, especially with the bleakness coming our way over the winter and beyond."
The good news is, even if your not with Shell Energy, you may also be entitled to a refund from your provider.
He added: "However, it doesn’t need to be all too alarming, as even if you’re not with Shell, you could also be in a similar situation you weren’t aware of, so it’s crucial to check if you could be also owed from your energy provider, saving you much-needed cash as energy bills continue to hike."
Read below to learn how you can see if you are eligible for an energy bill refund.
How to apply for a refund if you are owed
Contact your supplier - If you think you are entitled to a refund, it is crucial that you contact your supplier. You can reach them using the contact information on your bills or through your online account.
Customers may be owed money they were charged through over estimates made by providers.
Michael explained: "The amount paid each month is an estimate based on how much energy your supplier thinks you’ll use over the whole year. You may be owed money because you’ve used less energy than you’ve paid for."
Once you contact your supplier, tell them the amount of credit you think you are owed. It is important that you are prepared before you apply, as they will ask for evidence to support your claim.
Therefore, you should have an up-to-date meter reading ready to prove your case.
If your supplier has gone bust - You may still be entitled to some credit even if your supplier no longer exists.
Michael said: "If you have been subject to your supplier going bust, you’ll be pleased to know you can still be owed money.
"Contact your new supplier who will inform you on how you can claim back credit and how much it could be."
Plan ahead - While the thought of getting a cash refund seems like a treat, it is wise to note that energy bills are due to sky rocket in the coming months.
"Before claiming back any money, consider if you’re likely to have higher energy bills during the upcoming months, as the credit could become a lifesaver", said Michael.
He continued: "Your supplier may refund any money owed at the end of the year or pay back the amount by reducing your direct debit payments."
What to do if your claim is rejected
Appeal - While you supplier can reject your request, they must be able to give a reason why.
"Your supplier might not give you a refund if they have a good reason, however, they must explain their decision if they can’t", Michael added.
If you feel that their response is not sufficient, you can file a complaint with the Ombudsman service.
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