Shell has agreed to pay half a million pounds for overcharging thousands of prepayment meter customers on default tariffs over the past three years.
The energy giant’s consumer arm, Shell Energy Retail, will refund and compensate 11,275 customers after it discovered that it had sent the wrong rates to users’ meters.
It meant that those customers were forced to pay more than allowed under the regulator’s price cap at various times since January 2019.
Prepayment meter users already pay for their energy at a higher rate and include some of the country’s poorest and most vulnerable households. Shell has agreed to automatically refund overcharged customers the £106,000 they are owed in total, pay £400,000 into Ofgem’s consumer redress fund, and make a further £30,970 in extra “goodwill payments” to affected customers.
The energy provider will pay a total of £536,970. Customers are expected to receive refunds worth £9.40 each, on average.
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 company said it would be writing to customers to notify them about the payments.
Ofgem said the compensation package “would have been considerably higher” had Shell not self-reported the issue and taken steps to address the problem. The regulator also considered the additional financial hardship that the issue may have placed on prepayment customers, especially when energy prices have risen to historic highs.
The regulator’s 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,” he added. “Overcharging by suppliers can cause additional and unnecessary stress and worry at what is already a very challenging time for consumers across the UK.”
It is the second time the company has breached the price cap since it was introduced, having been forced in 2019 to compensate 12,000 customers whom it overcharged when the company was still trading under the First Utility brand. Shell bought the company in 2018.
“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,” Lawrence added. “The contributions Shell has made to the redress fund will help to support vulnerable consumers with their energy bills.”
