Shell pays out £537,000 after overcharging PPM customers

Shell Energy will pay out almost £537,000 after a series of operational errors led to thousands of prepayment meter (PPM) being charged above the price cap.

The company, which serves 1.4 million customers, discovered in March this year that for periods of time between January 2019 and September 2022, the meters of 11,275 PPM customers were not successfully updated in response to revised cap rates. As such, they were overcharged for their energy usage.

After informing Ofgem of its findings, Shell put in place measures to address its failings and the company agreed a package of redress with the regulator.

In total Shell will pay £106,000 in refunds, with customers receiving £9.40 on average.

Additionally, the supplier will pay £400,000 to Ofgem’s voluntary consumer redress fund and £30,970 in goodwill payments to affected customers, equating to a total payment of £536,970.

Ofgem said in determining the redress package, it considered the additional financial hardship this issue may have placed on PPM customers, especially when energy prices are at historic high levels.

It further considered Shell’s previous compliance with the price cap and noted that in 2019 it agreed to refund and compensate the 12,000 customer accounts it overcharged when the cap was introduced – the company was trading as First Utility at the time of the breach.

The regulator said it would not be pursuing formal enforcement action on this occasion, taking into account the fact that Shell self-reported the issue and put in place steps to address its failings. It did however note that had this not been done, the redress package sought “would have been considerably higher”.

Neil Lawrence, Ofgem’s director of retail, said: “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.”

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

The spokesperson added that the company will be writing to customers to let them know of the refund and redress package.

Justina Miltienyte, head of policy at Uswitch.com, commented: “At a time when consumers are paying close attention to their bills, it is vital that the processes setting payments are robust.

“People on prepayment meters are often the most vulnerable, and these extra costs are likely to have caused unnecessary stress and worry for many of Shell’s customers.

She continued: “While the company has tried to make things right for consumers affected – these sorts of mistakes should not have happened, especially not for the second time. Ofgem should step up its monitoring to ensure it doesn’t happen again, especially with prices due to rise further, placing consumers under more financial strain.”

Supporting vulnerable customers will be one of the key themes at Utility Week Forum this November. For more information, click here.