Energy giant Shell has received a fine of over £500,000 for overcharging thousands of customers with pre-payment meters since the government had introduced the energy price cap in 2019.
Due to “operational errors,” the home energy provider for the oil giant failed to update meters with new rates.
Ofgem said: “Overcharging by suppliers can cause additional and unnecessary stress and worry at what is already a very challenging time for consumers.”
The maximum amount suppliers can start charging consumers in England, Scotland, and Wales for every unit of energy is known as the energy price cap.
The average household electricity bill is anticipated to increase to about £3,600 as a result of the new cap, which will go into effect on October 1.
Millions of people are currently being impacted by the nation’s fastest rate of living expense growth. Shell recently reported record profits for the months of April through June of $11.5 billion (£9 billion).
Since the price cap went into effect in January 2019 and has now been in effect for more than three years, Ofgem has found that Shell overcharged more than 11,000 households, causing them to pay more than the price cap.
The errors occurred when tariff updates were sent to people’s prepayment meters to modify rates in response to changes in the amount of the price cap, but Shell claimed that not all meters were successfully altered due to a “variety of operational issues”.
Customers who are impacted will receive automatic refunds totaling £106,000, and Shell will contribute £400,000 to Ofgem’s voluntary consumer redress fund.
Customers will also receive payments from the oil giant, which discovered the errors and informed Ofgem, for a total of £30,970 in goodwill.
Around 4.5 million of the 22 million households paying the price cap have prepayment meters, making them some of the most vulnerable and impoverished households in the nation.
These energy customers are more likely to come from the lowest income groups, according to the nonprofit Citizens Advice.
Neil Lawrence, director of retail at Ofgem, 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.”
“We are 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. The overcharge, which averages £9.40 per customer, will be refunded along with a gesture of goodwill,” said a spokesperson for Shell Energy.
(Adapted from BBC.com)