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Energy firm Ovo has been told to pay out £2.4m after the regulator found it had not been dealing with customer complaints correctly.

Ofgem said that 1,395 Ovo customers were hit by problems, including long delays in dealing with complaints, in some cases up to 18 months.

Those affected will get about £271 on average in compensation, while Ovo will also pay £2m to the Energy Industry Voluntary Redress Scheme, which provides money to charities helping vulnerable customers.

Ofgem said affected customers do not need to take any action. Ovo said it had sent a letter of apology and compensation to those affected.

The energy regulator said that following its intervention, Ovo had given more resources to complaint handling, and improved its complaints management system.

“Energy is an essential service. When things go wrong, it can cause consumers a lot of distress," said Jacqui Gehrmann, deputy director of retail compliance at Ofgem.

"In this case Ovo failed to adequately protect and respond to their customers when it was needed most. This is not acceptable.

“Consumers deserve a clear and timely response when they make a complaint, and that’s why we stepped in quickly when we identified that Ovo’s performance was falling below acceptable standards."

In a statement, Ovo 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.”

Ofgem also revealed that it has collected more than £400m since 2020 just through enforcing rules and asking companies to comply.

It said it uses this money to help those who are struggling to pay bills.

In August, Ofgem set a new energy price cap for England, Scotland and Wales that will apply from 1 October to 31 December.

People using an average amount of gas and electricity will pay £1,717 a year, a 10% rise compared with now.