ENERGY firms will be paying out £4 million in compensation after overcharging thousands of customers amid the fuel costs crisis, it was revealed today.

Regulator Ofgem said that about 18,000 households did not receive the protection they were entitled to after Ovo Energy and Good Energy charged them above the maximum rates allowed by either the energy price cap or the government’s energy price guarantee scheme.

The government’s temporary scheme brought the typical household energy bill down to about £2,500 a year in Britain.

Good Energy overcharged more than 6,900 customers between January 2019 and October 2022, while Ovo overcharged nearly 11,000 between October 2022 and March 2023.

The affected households will receive a combined total of £2.7m from the two companies, while an extra £1.25m will go to vulnerable customers under Ofgem’s voluntary redress fund.

The average amount paid to Good Energy customers will be £109, while Ovo customers will receive an average of £181, the regulator said.

Ofgem deputy director of retail Dan Norton said it was “totally unacceptable” that people were overcharged during an “already so challenging and stressful time” for consumers.

“Energy suppliers should hear this loud and clear: we expect suppliers to act with the utmost care and integrity,” he added.

“We will continue to hold them to account if they do not meet their customer protection or reporting obligations.”

Both suppliers self-reported the problems to Ofgem, which the regulator said had led to the redress packages being lower than they could have been.

End Fuel Poverty Coalition co-ordinator Simon Francis called on Ofgem to “make up for lost time” and “beef up” protections for households, especially the most vulnerable.

“This is the second set of fines we’ve seen levied on energy firms this week for poor performance,” he told the Star.

“While these firms are often quick to complain about rising energy debt levels among consumers, the Ofgem fines show they should spend more time getting their own houses in order.”

Both companies have apologised to their customers and fixed the “issues” that caused the overcharge.

An Ovo spokesperson said it had been caused by delays in getting the discounts to their fixed-price customers.

Good Energy chief executive Nigel Pocklington said the company has submitted a formal improvement plan to prevent any similar mistakes occurring in the future.