Shell Energy refund: why Ofgem has fined company - which customers will get money back and how much?

Shell Energy has been ordered to pay out more than half a million pounds for overcharging thousands of its customers for gas and electricity since the energy price cap was put into place, over three years ago.

This isn’t the first time that the company has had issues with overcharging - back in 2019, Shell refunded and compensated around 12,000 customer accounts it overcharged on its default tariffs when the price cap was introduced.

This is everything you need to know.

Why has Shell been fined by Ofgem?

The Office of Gas and Electricity Markets (Ofgem) has ordered Shell to refund 11,275 prepayment customer accounts that were overcharged on its default tariffs.

Ofgem said the customers, who all have prepayment meters, had been overcharged between January 2019 and September 2022.

In March 2022, Shell found that, due to operational errors with the implementation of its default tariffs, it had overcharged over 11,000 prepayment customers.

Tariff updates were sent out to prepayment meters to amend rates in regards to changes in the level of the price cap, however not all meters were successfully updated to the revised rates.

Ofgem director of retail Neil Lawrence 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.”

How much has Shell been ordered to pay?

Ofgem has instructed Shell to refund its customers £106,000, in addition to the £30,970 in goodwill payments issued to affected customers.

Shell will also pay £400,000 to Ofgem’s voluntary consumer redress fund, which is operated on its behalf by the Energy Savings Trust. It allows companies to pay money to appropriate charities, trusts, organisations or consumers as a result of breaches of licence conditions.

This brings Shell’s total payment to £536,970.

What has Shell said?

Shell Energy said: “We’re sincerely sorry that errors updating our prepayment meter rates resulted in some customers being overcharged for a period of time.

“As soon as we identified the issue we began taking steps to put it right, and self-reported it to Ofgem.”

Ofgem has said that, “whilst this issue represents a serious matter, taking into account that Shell Energy Retail Limited self-reported the issue and has put in place steps to address the failings, Ofgem has decided not to take formal enforcement action on this occasion”.

It added: “Had Shell Energy Retail Limited not self-reported the issue and resolved in a timely manner – the redress package sought would have been considerably higher.”

Which customers will get a refund - and for how much?

Only customers with prepayment accounts affected by overcharging will receive a refund. Those customers will be automatically paid.

With Shell being ordered to pay back £106,000 to 11,275 households affected by overcharging, as well as an extra £30,970 in goodwill payments, customers are being refunded £9.40 per person, on average.

As the cost of living crisis continues to affect households around the UK, there are a number of support packages offered by the Government to help, including:

• £650 Cost of Living Payment for those on benefits
• £300 Pensioner Cost of Living Payment
• £150 Disability Cost of Living Payment
• £400 Energy Grant
• £300 Winter Fuel Payment
• £200 Energy Bills Payment