Watchdog orders Shell Energy to automatically refund thousands of customers after overcharging them

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Watchdog orders Shell Energy to automatically refund thousands of customers after overcharging them

Shell Energy admitted thousands of prepayment customers were overcharged
Affected customers only set to receive about £9.40, Ofgem said
The refunds will be paid automatically back to affected customers

By JANE DENTON FOR THISISMONEY: PUBLISHED: 09:04, 25 August 2022 | UPDATED: 09:27, 25 August 2022

Shell Energy Retail is to refund and compensate 11,275 UK prepayment customer accounts after they were overcharged.

The energy giant will refund £106,000 and also hand out £30,970 in goodwill payments to affected households, with the average amount being refunded to affected customers is £9.40.

Shell’s UK consumer gas, electricity and broadband business has admitted that thousands of people on default energy tariffs paid above the rates allowed under Ofgem’s price cap, after not all meters were updated correctly with new rates.

The error comes as millions of households face being plunged into poverty amid soaring energy bills and a wider cost-of-living crisis.

Refunds will be issued automatically to affected customers, Ofgem said in a statement today.

Shell Energy 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.

When the price cap changes, energy suppliers need to send updates to customer prepayment meters.

Shell Energy said the issue happened between January 2019 and September 2022.

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.’

Shell Energy ‘self-reported’ the issue. Had it not, the redress package would have been ‘significantly higher’, Ofgem said.

The regulator added: ‘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.’

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.

Energy giant Shell posted a record profit of £9.7billion for the second quarter of this year as it cashed in on the boom in wholesale oil and gas prices.

Ofgem is due to confirm the new price cap for October tomorrow, with bills expected to surge above £3,500.

According to some experts, energy bills could rocket to more than £6,500 in April, in the most severe forecast yet for household bills.

Revising their previous estimate of £6,089 upwards, consultancy Auxilione claimed that, following a spike in gas prices on Monday, regulator Ofgem’s price cap could rise to £6,552 in April. The firm also forecast that the cap could be upped to £5,066