25th Aug 2022 08:40
(Alliance News) - UK Ofgem on Thursday said Shell Energy Retail Ltd must pay GBP537,000 for price cap overcharging.
Shell Energy Retail is a unit of the oil major Shell PLC.
In March, Shell noted that it had overcharged 11,275 customers, due to "operational errors with the implementation of its default tariffs". These issues occurred between January 2019 and September 2022.
"Tariff updates were sent to prepayment meters to amend rates in response to changes in the level of the price cap, but due to a variety of operational issues, not all meters were successfully updated to the revised rates," Ofgem explained.
This meant that prepayment customers paid above the rates allowed under the price cap at the time.
Ofgem said that Shell is to refund and compensate 11,275 prepayment customer accounts which it has overcharged on its default tariffs. The total amount of customer detriment to be refunded if GBP106,000 and on average customers will be refunded GBP9.40 each.
Further, Shell must pay GBP400,000 to Ofgems's voluntary customer redress fund and an additional GBP30,970 in goodwill payments to affected customers, bringing the total to GBP536,970.
In determining the redress package, Ofgem considered the additional financial hardship that the issue may have placed on customers, especially when energy prices are at a historic high, the regulator explained.
However, as Shell self-reported the issues and has since put in steps in place to address the failings, Ofgem said it will not take formal enforcement action against the company. It added that it the issue was not self-reported the redress package would have been "considerably higher".
It also noted that in 2019 Shell agreed to refund and compensate 12,000 customer accounts that it overcharged when the price cap was first introduced.
"Suppliers must be vigilant and ensure that all customers, particularly those who may be in vulnerable circumstances, are protected by the cap. Where issues are identified, we expect suppliers to act quickly to resolve any overcharge and to engage Ofgem on the steps they are taking to put things right," Ofgem said.
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.
"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."
Shares in Shell were up 1.4% to 2,324.50 pence each in London on Thursday morning.
By Sophie Rose; [email protected]
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