Regulators moved to impose the penalty after it established that E.ON overcharged customers following price changes two years running.

Current rules state that suppliers must give customers at least 30 days’ notice of an impending price rise, leaving consumers time to switch to a better deal with an alternative supplier if they wish. If a customer opts to switch, they should be able to do so without incurring exit fees, or the new higher price. E.ON, however, failed to adhere to these regulations. A spokesperson for E.ON said that the errors “meant that some customers were overcharged, although in the majority of cases this was by less than £10.”

The firm has already compensated affected debit and standard credit customers, to the tune of £400,000. However, over 7,000 prepayment meter customers were also affected, and not recompensed. E.ON now have until May to track affected customers down and repay them.

Commenting on the penalty, an Ofgem spokesperson said the £7.75m sum takes into account the “serious” delay in repaying all affected customers, and the fact the energy company made the same billing error three years ago.

On that occasion, E.ON was compelled to pay back an average of £15 each to over 100,000 former customers; this time, the average repayment sums are £3.42 for prepayment customers, £8 for direct debit customers and £12 for standard credit customers.

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“E.ON’s errors meant customers who took the opportunity to switch were wrongly charged,” said Sarah Harrison of Ofgem. “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.”

Earlier this year, a survey published by ICM found that the Big Six are even more reviled by the UK public than banks. 46 per cent of respondents picked energy suppliers as their most disliked business.

The news was widely welcomed, with Ann Robinson of uSwitch.com praising the “tough action by the regulator.”

“The penalty should serve as a warning to the industry that customers must be treated fairly. Many consumers find energy bills difficult to understand at the best of times, so it’s essential that they have total confidence that their bills are fundamentally correct.”

Jonathan Reynolds, shadow minister for Energy and Climate Change, said the penalty “shows the energy market is broken.”

“The only way to restore trust in the energy market is to freeze prices until 2017, and to reform the energy market, including giving the regulator the power to cut bills this winter and creating a tough new watchdog with powers to strip energy companies of their licences if they repeatedly break the rules.”