Shell Energy to pay £390,000 for overcharging thousands of customers

Shell Energy Retail has been forced to pay £390,000 compensation and refunds after overcharging customers.

Energy watchdog Ofgem made the ruling after the supplier overcharged some 12,000 customers on its default tariffs when the energy price cap was introduced in January.

Ofgem's price cap monitoring found that in the three months to March 2019, around 12,000 electricity and gas customer accounts were charged a total of £100,736.63 above the price cap.

The watchdog said that Shell Energy Retail - the first to fall foul of regulators since the price cap came into effect - had agreed to refund affected customers by re-crediting their accounts and will pay additional compensation.

According to Ofgem, around 6,200 customer accounts were on tariffs for which they were paying above the cap for gas and electricity.

They will be refunded and paid £10 per fuel in compensation (£62,000 in total).

The remaining 5,600 customer accounts experienced a delay in their energy price being reduced under the price cap after requesting to change to cheaper tariffs, meaning that they paid above the cap for longer than necessary.

They will receive compensation of £5 per fuel (£29,000 in total).

In addition to the refund and compensation, Shell Energy Retail will pay £200,000 to Ofgem's consumer redress fund - set up to help support vulnerable customers - taking total payments to £390,000.

Ofgem said it decided not to take formal enforcement action against the utility company because it had taken steps to address failings and compensate customers.

Shell Energy Retail was rebranded in March 2019 from First Utility after it was acquired by global energy giant Shell a year earlier.

The watchdog said other unnamed suppliers also overcharged customers during the first cap period, but the extent of harm to consumers was considerably lower than for Shell Energy.

An Ofgem spokeswoman said "We have actively engaged with these suppliers to ensure that any overcharge is corrected - but decided not to take further enforcement action.

"Where we have identified that suppliers have a track record of overcharging, we will take a much firmer stance."

The price cap, which is temporary, was set in order to address the problem of 11 million customers on poor value energy deals, and applies to all customers on standard variable and default energy tariffs.

The default tariff cap is currently £1,254 per year for the period between 1 April and 30 September 2019 for households on dual fuel, single-rate based on typical consumption.

Colin Crooks, chief executive of Shell Energy Retail, 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."