Npower to pay record £26m fine over billing and customer service failures

Energy giant Npower has been fined £26m for sending out late and often inaccurate bills and failing to deal with complaints correctly, energy regulator Ofgem has said. The settlement is the largest yet agreed between Ofgem and a "big six" energy supplier.

"Not only have its billing and complaint-handling procedures been chaotic, it treated many of its customers poorly, which is completely unacceptable," Dermot Nolan, the watchdog's chief executive said.

The company issued more than 500,000 late bills, while some customers also received inaccurate bills between September 2013 and December 2014, Ofgem said, adding that during this period the regulator said more than two million complaints were made by Npower customers.

Many of Npower's problems occurred after a new IT system was introduced in 2011. Long-running problems with it have seen the company lose 200,000 customers this year and make a £48 million loss in the first nine months of the year.

But the watchdog found that the company, which was fined £2 million in October 2011 for a similar offence, "often failed to resolve these issues promptly."

The worst-affected customers did not receive bills for more than a year, breaching British billing rules that companies cannot charge for energy used more than a year earlier.

Npower also "pursued debts, which were in dispute, and failed to keep its own commitments to customers on billing," Ofgem said, adding that this had "caused significant distress and worry for many."

Ofgem said the £26m would be divided between some of the worst-affected customers and charity.

Blaming a change in systems, Simon Stacey, Npower's managing director of domestic markets, said they "have been very disappointing for our customers – and for Npower."

Stacey said: "We are very sorry about what has happened and that is why we have agreed this significant package of customer redress. We've reduced complaints by nearly 70% since the beginning of this year."