The group overcharged on its default tariffs when the price cap was introduced. It will also have to pay £200,000 to Ofgem’s consumer redress fund. Shell Energy Retail was trading as First Utility at the time of the breach.

The price cap for 11 million First Utility customers on poor value default tariffs came into force on 1 January 2019. Around 6,200 Shell Energy Retail customer accounts were on tariffs that were not compliant with the price cap – their bills were higher than the cap level. Shell Energy Retail has agreed to refund these customers and pay an additional £62,000 in compensation.

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.

After Shell Energy Retail agreed to take steps to address the problem, Ofgem decided not to take formal enforcement action.

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.

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“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. Hopefully this news will help encourage more people to check their bills and see if they can get a better deal elsewhere.”