Shell has agreed to pay half a million pounds for overcharging thousands of prepaid meter customers with default rates over the past three years.
The energy giant’s consumer arm, Shell Energy Retail, will refund and compensate 11,275 customers after it found it had sent the wrong rates to users’ meters.
It meant those customers were forced to pay more than the regulator’s price cap allowed at various times since January 2019.
Prepaid meter users already pay a higher price for their energy and include some of the poorest and most vulnerable households in the country. Shell has agreed to automatically refund overcharged customers the total £106,000 owed to them, pay £400,000 to Ofgem’s consumer compensation fund and make a further £30,970 in additional “goodwill payments” to affected customers.
The energy supplier will pay a total of £536,970. Customers are expected to receive refunds worth £9.40 each, on average.
A Shell Energy spokesman said: “We sincerely regret that errors in updating prepaid meter rates have resulted in some customers being overcharged for a period of time. As soon as we identified the issue, we began to take action to correct it and reported this to Ofgem ourselves.” The company said it would write to customers to notify them of the payments.
Ofgem said the compensation package “would have been considerably higher” had Shell not been made aware of the problem and taken steps to fix the problem. The regulator also considered the additional financial hardship the problem could have caused pre-paid customers, especially when energy prices have risen to record highs.
The regulator’s director of retail, Neil Lawrence, said: “Ofgem expects suppliers to stick to the terms of the contracts they have with customers, particularly by making sure they don’t pay more than the price cap level.
“Households across Britain are already struggling with rising energy bills and the cost of living,” he added. “Overburdening providers can cause additional and unnecessary stress and worry at what is already a very difficult time for consumers across the UK.”
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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 it overcharged when the company was still trading under the First Utility brand. Shell bought the company in 2018.
“Ofgem is always willing to work with suppliers who have failed to meet 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 compensation fund will help support vulnerable consumers with their energy bills.”