Energy regulator Ofgem confirmed on Wednesday (10 January) its decision to impose a financial penalty on Hudson Energy Supply UK (HES).
The penalty, which amounts to £1,668,426, is being enforced due to HES’ failure to comply with standard licence conditions (SLCs) 0A, 7A, 7B and 21B of its electricity supply licence.
It is worth noting that HES was acquired by oil and gas giant Shell in October 2019 and later rebranded as Shell Energy in 2020.
A description of each of the SLCs breached by HES can be found below.
- SLC 0A (the non-domestic standards of conduct) sets out specific obligations concerning the requirement to treat micro business consumers (MBCs) fairly.
- SLC 7B was the previous iteration of SLC 0A and was superseded by SLC 0A on 10 October 2017. Ofgem said that in this case the period of breach spanned both periods and hence both SLC 0A and 7B apply.
- SLC 7A.1 sets out specific obligations to take all reasonable steps to identify whether or not a Non-Domestic Customer is an MBC or not – or to deem that customer to be an MBC.
- SLC 7A.8 sets out specific obligations concerning the notification of MBC contract terms and other information.
- SLC 21B.1 sets out specific obligations concerning the requirement to bill based on meter readings.
As previously reported by Current± in November 2023, Ofgem issued the non-domestic energy supplier with a fine due to “failing its customers by not complying with a number of important licence conditions”. This penalty arose following an investigation conducted by the energy regulator which started in July 2020.
The investigation found that HES agreed to an arrangement with a third-party in which it would secure customers for the non-domestic energy supplier and conduct a number of customer facing activities. This partnership concluded in July 2020.
Perhaps the most striking breach Ofgem noted was that customers suffered “serious overcharging” with one month seeing an average overcharge of more than £1,800. In fact, one customer was overcharged by around £22,500.
HES has agreed to pay the penalty into Ofgem’s voluntary redress. The money will be distributed to appropriate organisations for the benefit of energy consumers.