Nearly two million households overcharged for gas are being refunded in one of the biggest payouts of its kind, it emerged today.
Energy giant npower is paying back £63 million to around 1.8 million customers - an average payment of about £35.
It 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 time of year.
At the same time, npower lowered 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 £2 million 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 £1.2 million 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 £63 million 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, We're now doing all we can to improve our communication with customers."
Head of Consumer Focus Mike O'Connor said: "Consumers have been waiting a long time for this announcement and we are pleased with the final result.
"Sixty-three million pounds plus VAT and interest for consumers is an excellent outcome and shows a major commitment from npower to its customers."
He added: "Consumer Focus has worked closely with npower to ensure that refunds are made fairly and that no customer loses out.
"A huge amount of work and collaboration has resulted in the right thing being done by npower for its customers and we welcome this. It has been an great example of how consumer organisations can work with industry to deliver a fair deal for consumers."
Last year npower was fined £1.8 million after failing to take sufficient action to prevent mis-selling of contracts to customers.
Ofgem found that the firm breached conditions of its supply licence by failing to take adequate steps following complaints from customers about visits by the company's doorstep salespeople.Reuse content