Customers get £63m energy refunds

Energy giant npower will pay back 63m to about 1.8 million customers –an average payment of about 35.

This confirmation comes after the firm admitted confusingly changing its billing mechanism in 2007, leaving many smaller gas customers paying for more fuel than they used.

Npower started charging households a fixed monthly number of more expensive initial gas units – known as primary block units. Previously the amount of primary units charged varied according to the time of year.

At the same time, npower lowered other prices and introduced some discounts.

While most customers benefited overall, some smaller customers were billed for more than the usual number of primary units, leaving them out of pocket.

Npower – which was fined nearly 2m last year over the mis-selling of contracts – said: "Although the vast majority of our customers benefited from the combined effect of the changes, some, who were low users of gas, did not."

Energy regulator Ofgem started a probe after customer complaints, seeing the company pay back 1.2m to 200,000 customers last year.

But the firm was forced to go back through millions more bills after a campaign by watchdog Consumer Focus, and has ended up having to pay the 63m plus VAT and interest.

Npower – which has 6.5 million customers in the UK – said it will be writing to all those affected over the next two months, even if they are no longer customers, offering payments that can be cashed at the Post Office. The sums will vary from 1 to 100.

The firm said: "We're sorry that the complexity of the changes we made caused confusion."