Energy firm E.ON is to hand over £7.75m to Citizens Advice after regulator Ofgem said it had overcharged customers.
The package of help for vulnerable customers is in addition to the £400,000 E.ON has already paid back to customers.
Ofgem said the penalty reflected E.ON’s “repeated failing” on billing rules after the company incorrectly imposed exit fees and overcharged customers following price rises in January 2013 and January 2014.
The regulator said E.ON’s errors meant customers who took the chance to switch suppliers after the bill rises were wrongly charged.
Companies are not supposed to apply exit fees if a customer signals their intention to move supplier within the standard 30-day notice period of a price rise. This is the case even if the switch occurs after the price rise.
Sarah Harrison, Ofgem’s senior partner in charge of e nforcement, said: “Ofgem’s rules give customers a chance to avoid exit fees and higher costs when suppliers put up prices.
“These are important customer protections and it is vital that suppliers play by the rules so customers are encouraged to engage in the market.”
In November 2012, E.ON paid out £1.7m for incorrectly charging exit fees or overcharging customers following price rises.
Ms Harrison said: “It’s absolutely unacceptable that E.ON failed to provide these vital customer protections yet again and this persistent failure is the reason for the high penalty.”
The errors in respect of price rises in January 2013 and January 2014 affected direct debit and standard credit customers. The average amount paid back was around £8 and £12 respectively.
E.ON’s error also resulted in around 500 prepayment customers for the January 2013 price increase and around 6,500 for the January 2014 increase missing out on an average refund of £3.42.
E.ON is tracking down these customers to provide refunds by the end of April.