Energy company npower has been ordered to pay £26 million for failing to treat customers fairly.
Ofgem said the Big Six supplier’s billing issues, following the introduction of a new IT system in 2011, affected more than 500,000 customers between September 2013 and December last year.
Some affected customers received inaccurate bills “with little or no detail” on how they were calculated.
Customers made more than two million complaints during that period, with the majority about late or inaccurate bills.
The regulator added the supplier failed to handle the billing failings and complaints “effectively within a reasonable timeframe”.
npower will pay part of the fine to domestic customers who have been affected and use the rest for projects that will help vulnerable customers.
Dermot Nolan, Ofgem Chief Executive said: “npower failed its customers. Not only have its billing and complaint handling procedures been chaotic, it treated many of its customers poorly, which is completely unacceptable. npower’s management failed to act quickly enough to protect its customers when things went wrong with changes to its IT system.”
Ofgem has agreed targets with npower for it to further improve its billing and complaints handling.
They include reducing the number of late invoices more than six months old from 46,000 to 15,000 as well as cutting the number of complaints over 56 days old from 9,000 to 4,500.
If npower fails to meet the targets by the end of June 2016, it will stop proactive domestic sales activity and advertising until all are met.
However the regulator added the energy firm’s performance has improved since its intervention.
Simon Stacey, Managing Director, Domestic Markets at npower said: “The last few years, since we changed the systems that support our domestic business, have been very disappointing for our customers – and for npower. We are very sorry about what has happened and that is why we have agreed this significant package of customer redress.
“We’ve reduced complaints by nearly 70% since the beginning of this year and as part of this package of measures with Ofgem, we have agreed targets for significant sustainable customer service improvement that everyone at npower is working tirelessly to achieve.”
Last month Ofgem also ordered business energy supplier BES to pay £980,000 for failing in customer service following an investigation while Co-operative Energy topped the supplier complaints table.