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Shell Energy pays £390,000 after price cap blunder

Shell Energy pays £390,000 after price cap blunder

Shell Energy is set to refund and compensate around 9,000 customers after it was found to have overcharged on tariffs protected by energy regulator Ofgem's price cap.

The supplier is set to pay out £390,000 in total, including £190,000 in refunds and compensation for charging too much under the price cap, and a further £200,000 to Ofgem's voluntary consumer redress fund, which helps support vulnerable customers.

Under Ofgem's price cap monitoring, it found that Shell Energy had overcharged 12,000 customer gas and electric accounts – affecting around 9,000 individual customers – between January and March 2019.

As Shell Energy – which was trading under First Utility at the time – has agreed to refund and compensate its customers, Ofgem has said it will now not take enforcement action against the supplier.

The price cap, introduced in January 2019, sets a maximum limit on the gas and electricity rates suppliers can charge on standard and default tariffs. At the time, the price cap was £1,137/year on typical use. It's currently set at a typical £1,254/yr.

Customers will be refunded and paid up to £20 compensation

According to Ofgem, of the 12,000 gas and electricity accounts that were affected, 6,200 were on tariffs that were not compliant with the price cap. So even though these customers should have been on a tariff protected by the cap, they were paying over the limit.

These customers will be refunded and given £10 compensation per fuel.

The remaining 5,600 accounts were left overpaying due to a delay in Shell Energy reducing their rates after requesting a change in payment method. These customers will be refunded and given £5 compensation per fuel.

Under the price cap, the maximum rate is lower if you pay by monthly direct debit, and higher for all other means of paying. Shell Energy customers that switched to monthly direct debit between January and March 2019 saw a delay in getting their rates reduced to the lower capped level, meaning they were charged above the cap for longer than necessary.

The refund and compensation will be credited to customers' accounts. If you think you've been affected but don't receive the money, contact Shell Energy.

What does Shell Energy say?

Shell Energy Retail Limited chief executive Colin Crooks said: "We'd like to apologise to all customers who were temporarily out of pocket. For the vast majority of our customers, we implemented the cap in line with Ofgem's licence conditions. We had a small number of customers on fixed-price default tariffs to whom we didn't apply the capped rates because most of these customers would have been better off remaining on their existing tariff.

"However, we recognise that there were some who would have been better off on the capped rates or who suffered a delay in changing their payment method. We always intended to re-credit these customers, which we are now doing together with a compensation payment, and have agreed to pay into the Ofgem redress fund."