Around 47,000 E.on customers have received or will soon be paid a refund, while charity Citizens Advice will get £7.75 million, after Ofgem found the provider overcharged customers.
Under the regulator's rules, energy suppliers have to give customers 30 days' notice of a price rise, which allows customers a chance to switch before the increase takes effect.
If you notify your provider that you want to switch away within these 30 days, you won't incur exit fees or the higher charge even if the switch takes place after the price rise. See MoneySavingExpert.com's Cheap Energy Club to see if you could switch and save.
But following an investigation by Ofgem, big six energy provider E.on has been found guilty of incorrectly charging exit fees and/or overcharging customers following price rises in January 2013 and January 2014.
Ofgem says the level of today's penalty also reflects the fact E.on failed to disclose until late in the investigation that prepayment customers, as well as standard energy customers, were overcharged.
In November 2012, E.on paid out £1.7m – £1.4m to affected customers and £300,000 to charity Age UK – for incorrectly charging exit fees or overcharging customers following price rises (see the E.on pays out £1.7m after billing blunder MSE News story).
I'm an E.on customer. Do I need to do anything?
Ofgem says E.on customers do not need to do anything, if you're affected you've either already had a refund or will get one by the end of April.
The regulator says refunds of £400,000 have already been made to around 40,000 direct debit and standard credit – where you pay on receipt of a bill – customers.
They will have received this directly into their bank accounts, and this includes customers who've switched away from E.on since the issue occurred.
E.on is in the process of contacting around 7,000 prepayment customers to provide a refund by the end of April. It says they will receive cheques within the next month.
If you believe you're affected but are concerned you haven't received a refund, contact E.on's customer service team.
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How much is being repaid?
Affected customers will be refunded the amount they overpaid, plus interest at 8%. The average repayments are as follows:
- Direct debit customer: £8
- Standard credit customer: £12
- Prepayment customer: £3.42
Sarah Harrison, senior partner in charge of enforcement at Ofgem, says: "E.on's errors meant customers who took the chance to switch were wrongly charged.
"It is important that E.on has repaid potentially affected customers and cooperated with the investigation. However it's absolutely unacceptable that E.on failed to provide these vital customer protections yet again and this persistent failure is the reason for the high penalty."
'E.on sincerely apologises to those affected'
In a statement issued this morning E.on says: "Following reports from E.on, Ofgem opened an investigation into the errors in June 2014 and has agreed today's penalty package in recognition of the company's errors.
"These errors meant that some customers were overcharged although in the majority of cases this was by less than £10. E.on has identified potentially affected customers and is continuing to automatically provide redress payments to ensure no-one loses out financially.
"Although the underlying reasons are different, this is not the first time that E.on has made this error and the company sincerely apologises to those affected. E.on has agreed with Ofgem to carry out an independent external audit relating to the specific breaches and to implement any appropriate recommendations.
"E.on is committed to ensuring that no one will lose out financially and is pleased that the payment is going to a worthwhile cause that will provide support to those in need."