Energy giant OVO has been hit with a £2.37million penalty by Ofgem for failures in handling customer complaints.
Affected customers are set to receive compensation averaging £271 each.
The regulator identified that 1,395 OVO customers were affected by lengthy delays in addressing complaints, with some waiting up to 18 months for resolution.
OVO will pay £378,512 in direct compensation to affected customers, who will be contacted individually.
An additional £2million will be paid to the Energy Industry Voluntary Redress Scheme.
The penalty comes after Ofgem identified several failings in OVO's complaint handling process, which included significant delays in addressing customer complaints, with some cases taking up to 18 months to resolve.
Following Ofgem's intervention, OVO has taken steps to improve its complaint handling process
PAAdditionally, the energy supplier was found to have delayed actioning decisions from the Energy Ombudsman when complaints were escalated.
Jacqui Gehrmann, deputy director of retail compliance at Ofgem, said: "Energy is an essential service. When things go wrong, it can cause consumers a lot of distress.
"In this case OVO failed to adequately protect and respond to their customers when it was needed most. This is not acceptable."
Following Ofgem's intervention, OVO has taken steps to improve its complaint handling process.
The company has increased its complaint handling resources, enhanced its complaints management system, and improved case management processes to ensure senior colleagues have oversight of complaints.
Ofgem first engaged with OVO last June after concerns were raised about the time taken to address complaints referred by Citizens Advice Scotland's Extra Help Unit and to action decisions from the Energy Ombudsman.
Natasha Gilmour, head of operational support at Citizens Advice Scotland, welcomed OVO's response to the investigation, stating: "While it's rare for a compliance case to be necessary to resolve such issues, it is reassuring to see how OVO has responded to the investigation by Ofgem, and we are satisfied that the new practices implemented are ensuring good and timely outcomes for our clients."
The Energy Ombudsman also expressed approval, saying: "We welcome today's news that following compliance engagement between Ofgem and OVO, consumers will be compensated for OVO's failures to implement the remedies set by the Energy Ombudsman."
OVO has acknowledged the issue and taken responsibility for the delays.
A spokeswoman for the company said: "We recognise that a particular group of our customers in 2023 waited longer than we'd like for a resolution and were overdue a response from us, so we've sent them a letter of apology and compensation to help."
Affected customers do not need to take any action. OVO will contact them directly regarding the compensation, which is expected to average around £271 per customer.
This case highlights Ofgem's commitment to protecting consumers and improving industry standards.
In 2023 alone, the regulator recovered £77.2 million in fines, customer refunds, compensation and alternative action payments - a £50.5 million increase from 2022.
Since 2020, Ofgem has collected over £400 million through compliance and enforcement activities, which has been used to support households struggling with energy bills.
