Utility company Utilita will now pay out £500,000 as compensation after overcharging almost 40,000 customers.
Thousands of people will be owed a refund after an energy company charged its customers too much.
The company will pay £500,000 to households as compensation.
The customers have now been compensated by Utilita and will also receive at least £10 as part of the compensation package in the form of a goodwill payment.
Industry watchdog Ofgem said that pre-payment customers were overcharged by a total of more than £125,000.
A further £45,000 will also be paid into Ofgem’s voluntary compensation fund as part of the £500,000 payout.
A payment of £140 will also be made to approximately 900 Utilita customers who have applied to the supplier for the Government’s Warm Home Discount programme but have not been successful.
Under the Winter 2020 to 2021 programme, eligible customers were able to receive £140 from their Winter 2020 to 2021 electricity bill, with the money not paid directly to the customers but as a one-off discount on their electricity bill between September and March.
Utilita reported to the regulator for erroneously inflated prices for customers between May and September 2019.
The regulator said its investigations had revealed that some 6,600 pre-payment customers were a total of £22,700 above the price cap for pre-payments, while some 33,000 customers were overcharged by a total of £105,000 above the amount they should have paid under their advertised energy tariff.
Cathryn Scott, Ofgem’s Director of Enforcement and Emerging Issues, said: “Ofgem closely monitors suppliers’ compliance with the price cap, ensuring that consumers pay a fair price for their energy.
“This case sends a message to all suppliers that Ofgem will intervene if they demand prices from customers that are above the level of the price cap or above the advertised rates.
said Utilita boss Bill Bullen: “I would like to apologize unconditionally to all customers who have temporarily fallen out of pocket.
“It also shows that Ofgem is willing, where appropriate, to work with suppliers who have not met their obligations, but who have reported themselves and are willing to put things right quickly.
“We know that we can always improve, and we will always take up criticism of legitimate omissions.
“Ofgem made it clear that the over-enlargement was caused by our failure to implement an administrative procedure that corrected the temporary over-enlargement.
“I am sorry that we did not make prompt refunds during the period in question.