Shell Energy Retail is to refund and compensate around 12,000 customer accounts it overcharged on its default tariffs when the price cap was introduced. In addition, the supplier will pay £200,000 to Ofgem’s consumer redress fund, equating to a total payment of £390,000.

The price cap for 11 million customers on poor value default tariffs came into force on 1 January 2019.

Ofgem’s price cap monitoring found that between January and March 2019 Shell Energy Retail overcharged around 12,000 electricity and gas customer accounts a sum of £100,736.63 collectively above the level of the price cap.

To rectify its failings Shell Energy Retail, trading under First Utility at the time of the breach, has agreed to refund the affected customers by re-crediting their accounts and will pay additional compensation to all affected customers.

Around 6,200 Shell Energy Retail customer accounts were on tariffs that were not compliant with the price cap, meaning they were paying above than the cap level for their gas and/or electricity. Shell Energy Retail has agreed to refund these customers and pay an additional £62,000 in compensation (£10 per fuel).

The remaining 5,600 customer accounts experienced a delay in their energy price being reduced under the price cap after they requested to change to a cheaper means of paying for their energy, which meant they were paying above the cap level for longer than necessary. Shell Energy Retail has agreed to refund these customers and pay £29,000 in compensation (£5 per fuel).

Shell Energy Retail has agreed to pay an additional £200,000 into Ofgem’s voluntary redress fund to help support vulnerable customers.

Ofgem has decided not to take formal enforcement action taking into account the steps Shell Energy Retail has taken to address its failings and the redress it has agreed to pay.

Peter Earl, head of energy at comparethemarket.com, said “Breaching the energy price cap is a schoolboy error. The price cap is meant to be there to protect customers from disproportionate price hikes, not overcharge them. This announcement could do little to restore people’s confidence in the effectiveness of the cap, especially following a significant hike to millions of people’s bills during April. The issue also highlights some of the dangers of being on a standard variable tariff – people often pay without scrutinising their bill or knowing what they are paying for.”