Energy company Utilita has agreed to pay out £830,000 after the industry watchdog highlighted failures in its practices.
The provider was found to have failed to consider individual circumstances when providing additional support to customers on prepayment metres.
An assessment carried out by Ofgem found that 25,000 Utilita customers were not receiving the correct support, including those with medical issues and those classed as vulnerable.
Affected customers will receive £20 each (totalling £508,260) in most cases, as a direct credit on their meter.
A further £321,740 will also be paid into the Energy Redress Fund to support energy consumers in vulnerable situations, as well as other innovation and carbon emission reducing investments.
Ofgem says the company has taken steps which they consider to be appropriate to secure compliance.
Agreeing to the financial redress package instead of a penalty means those customers affected will get the payment directly and more quickly.
Cathryn Scott, Ofgem’s Director for Enforcement and Emerging Issues, said: “As the energy regulator, protecting consumers is our top priority, and we have strong expectations that energy suppliers must take the individual circumstances of consumers, particularly those who in vulnerable situations, into consideration.
“Prepayment meters are currently relied on by around 4 million UK households, and the current cost of living issue is placing pressure on many households, which in turn is causing more people to require additional support credits to top-up for their prepayment meters.
“While Utilita has moved swiftly to correct these issues and agreed to compensate those affected, this action should serve as a reminder to other suppliers to go further to ensure vulnerable groups are getting the support they need, particularly during the colder winter months.”
Assessments carried out by Ofgem exist to make sure suppliers are delivering for consumers.
This includes deep diving into supplier policies, governance, procedures and practices - and highlight where urgent improvements are required.
It comes as the Government announced millions of households will receive a £400 discount on their energy bills from October as part of the Energy Bills Support Scheme.
As part of this scheme, customers on traditional prepayment meters should receive smart meter credits or payment vouchers providing them with tops-up for their meter.
More information about the vouchers, and how they work, is available on the UK Government’s website.
Prepayment meter customers who have not received their credit or vouchers are being advised to contact their suppliers right away for further clarity.
