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.
