Ovo Energy has been ordered by the regulator to pay £2.4 million in compensation to UK customers over its handling of customer complaints.
Almost 1,400 customers of the energy company were affected by various issues, Ofgem said, with long delays in addressing complaints including some cases up to 18 months.
Furthermore, Ovo was slow to follow up on decisions from the Energy Ombudsman when complaints were progressed.
The watchdog was brought in by the Citizens Advice Bureau's Extra Help Unit and by the Energy Ombudsman to carry out its decisions.
Of the total payment, £378,512 is being sent to some affected customers, while £2 million has been paid to the energy industry voluntary redress scheme, which Ofgem said was in recognition of the severity of consumer detriment caused.
Jacqui Gehrmann, deputy director of retail compliance at the watchdog, 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."
Ofgem said improvements Ovo could make would include upgrading its complaint handling system and putting on more staff, with the company asked to provide a plan on how it would address and resolve these issues.
The Extra Help Unit is a Great Britain-wide service managed by Citizens Advice Scotland to help vulnerable consumers experiencing difficulties with their energy suppliers.