Energy supplier E.On is to pay back around £1.4m to approximately 94,000 customers who were incorrectly charged exit fees or overcharged following price rises, regulator Ofgem has announced.
Ofgem said E.On had also agreed to make an additional payment of around £300,000 to a consumer fund run in partnership with Age UK as a "goodwill gesture".
The regulator said it had "secured a commitment" from E.On to pay back the money after the supplier recognised it had failed to meet licence obligations relating to the 30-day notice of price rises it is required to give customers.
The 30-day rule gives customers the chance to switch suppliers before the increase takes effect. They do not incur exit fees or the higher charges if they signal their intention to move within this time, even if the switch occurs after the price rise.
Ofgem said it had been assured by E.On that all of the consumers affected had been identified and would be contacted and sent a rebate of an average of £14.83. The amount includes 8pc interest on the amount they were incorrectly charged.
Sarah Harrison, Ofgem's senior partner in charge of enforcement, said: "Ofgem has put in place protections for consumers so they can get a fair warning if their supplier puts up prices and time to shop around for a better deal.
"E.On has accepted it failed to meet these protections. Today's announcement that E.On will compensate customers is a positive step by the company to put right their mistakes and is welcome."
In a statement on its website, E.On apologised for incorrectly applying increases to some former customers who left the company after price rise announcements in 2008 and 2011. It said those affected had been identified by E.On and would be sent cheques to refund the money owed, with interest added, in January next year. The average payment would be £14.83.
E.On said that problems with its switching process meant many leaving customers were charged the new, higher price on the days that the switch was still passing through the system.
It said: "Customers who told E.On they were changing energy supplier immediately after the price rises in 2008 and 2011 will receive a cheque to pay back the money owed by the company with interest added. E.On will pay out an approximate total of £1.4 to around 94,000 customers. All customers due this payment have been identified and no action is required on their behalf."
E.On's customer service director, David Bird, said: "We are very sorry to have let down some of our former customers and have made clear that we will refund the money plus interest. Our systems are being updated to ensure this mistake can never happen again.
"We've been open in our failure with the energy regulator, Ofgem, and are pleased to have agreed with them how we can put this right and have identified all customers who are due to receive payment from us in January."