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

Oil giant’s gas and electricity supply business breached government’s price cap, levying £100,000 in excess charges

Shell Energy will re-credit the accounts of affected customers with the amount they were overcharged plus additional compensation (PA)

Shell Energy is to pay £390,000 in fines and compensation after overcharging around 12,000 customer accounts.

The company, which was known as First Utility until being bought and renamed by oil giant Shell, overcharged on its default tariffs after the government’s energy price cap was introduced at the start of 2019.

Energy watchdog Ofgem found that between January and March Shell Energy levied charges totalling £100,736.63 in excess of the cap.

In addition, the supplier will pay £200,000 to Ofgem’s consumer redress fund to help support vulnerable customers and £90,000 in compensation, equating to a total payment of £390,000.

The price cap for 11 million customers on poor value default tariffs came into force on 1 January 2019. Shell Energy is the first company to face enforcement action for breaching the cap. A number of other companies are understood to have breached the cap but consumer detriment was significantly smaller than that caused by Shell Energy so Ofgem did not take enforcement action.

Shell Energy will re-credit the accounts of affected customers with the amount they were overcharged plus additional compensation.

Around 6,200 customer accounts were on tariffs that were not compliant with the price cap, meaning they were paying above than the cap level for their gas, electricity or both. In addition to a refund each of these customers will receive an additional £10 per fuel.

The remaining 5,600 customer accounts experienced a delay in their energy price being reduced under the price cap after they requested to change to a cheaper means of paying for their energy.

This meant they were paying above the cap level for longer than necessary. They will each receive a refund plus an extra £5 per fuel.

In total the 12,000 customer accounts affected around 8,800 customers.

Ofgem said it had taken into account the fact that Shell Energy had taken steps to address its failings and to pay redress.

Colin Crooks, chief executive of Shell Energy, apologised to all customers who were temporarily out of pocket. “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.”

The default cap is currently £1,254 per annum for the period between 1 April and 30 September 2019 for households on dual fuel, single-rate (no peak/off-peak) tariffs based on typical consumption.

Shell announced in March this year that it would switch all of its 700,000 energy customers to renewable supply.

Purchasing First Utility in 2018 marked Shell’s first step into retail gas and electricity supply as it looks to diversify away from its core fossil fuels business and take on the Big Six energy suppliers.

The vast majority of the group’s £388bn annual revenues still come from oil and gas, however.