Shell Energy to hand refund to tens of thousands of Britons for overcharging on tariffs

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Shell Energy Retail will offer refunds to those affected for the overpayment, along with goodwill cash and a redress fund for consumers held by the energy watchdog. Some customers were accidentally overcharged on their tariffs for periods of time from January 2019.

Ofgem said customers would receive an average refund of around £9.40. It comes as rising wholesale gas prices – which Shell Energy’s parent company has made healthy profits from – are expected to push household energy bills as high as £4,200 a year this winter.

The consumer energy supplier – which was originally branded as First Utility – discovered “operational issues” in March this year which meant that tariff updates in response to changes in the level of the price cap were not implemented on some prepayment meters. 

It found that not all meters had been sucessfully updated with the new default tariff rates, causing the overcharging of some customers but not others.

Ofgem said that the company would now compensate 11,275 households, with a total amount of £106,000 being refunded.

Additionally, the regulator said Shell Energy would make £30,970 in goodwill payments, and a £400,000 payment to Ofgem’s voluntary consumer redress fund.

The money in the scheme goes “to appropriate charities, trusts or organisations in lieu of, or in addition to a financial penalty for breaches of licence conditions”, including energy saving programmes and advice services.

Ofgem said the refunds would be automatically issued to customers affected by the error.

Neil Lawrence, Director of Retail at the watchdog, said: “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.

“Ofgem is always prepared to work with suppliers who have failed to comply with their obligations, but who have self-reported and are determined to put things right, as Shell has done here. The contributions Shell has made to the redress fund will help to support vulnerable consumers with their energy bills.”

Shell Energy is wholly owned by Royal Dutch Shell, which posted £9.4billion in profits in the last three months alone, with £6.5billion expected to be dished out to shareholders.

The two are distinct companies, and Shell Energy’s accounts for 2021 show it made an operating loss of £83.6million on gross profits of £83.9million, which it attributed to a “very tough” market for energy suppliers.

That tough market has only gotten tougher in the months since, as wholesale energy prices have continued to rise, in no small part due to the Russian invasion of Ukraine limiting the supply of Russian and Ukrainian fossil fuels.

However, consumers and campaigners have questioned the huge profits being raked in by energy wholesalers at a time of crisis.

UN Secretary General Antonio Guterres said earlier this month that it was “immoral” for oil and gas firms to profit from the invasion of Ukraine, adding that the “grotesque greed is punishing the poorest”.

He has called for fossil fuel companies to face special taxes to limit their profits.

Ofgem said that it considered the “additional financial hardship” that the prepayment meter error would have placed on consumers when considering the redress package Shell Energy would have to pay out.

It also said the company, when operating as First Utility, had previously agreed to refund and compensate 12,000 customers in 2019 for overcharging customers when the price cap was originally introduced.

The energy price cap is a measure introduced by the Government to stop households on default tariffs from paying more than they can afford.

It was last increased in April, to £1,971 a year, with prepayment customers seeing a rise of £708 to £2,017.

The next price cap level is expected to be announced tomorrow (Friday), to start in October, and is anticipated to rise by as much as 80 percent to £3,553.

More to follow…



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