Charter and its new subsidiary Time Warner Cable (TWC) have been overcharging customers at least $7.2 million per year for equipment and service, a US Senate investigation has found.

Time Warner Cable over-billed customers nationwide an estimated $639,948 between January and April of this year, which projects to a yearly total of $1,919,844. Charter, meanwhile, "informed the [Senate's investigative] Subcommittee that it over-billed customers by at least $442,691 per month," the report said. That works out to overcharges of at least $5,312,292 per year. When added to Time Warner Cable's overcharges, that's $7.2 million that customers paid in erroneous charges over and above the already high prices of cable TV.

The report was released today as senators grilled cable company executives from Charter, Time Warner Cable, Comcast, AT&T-owned DirecTV, and Dish on customer service and billing problems. The Senate report, as well as video of the hearing and transcripts of cable executive testimony, is available here.

The Charter/Time Warner Cable billing problems are particularly severe because neither company had been issuing automatic refunds or credits to overcharged customers, the Senate report said. During the six-and-a-half-year time period examined by the subcommittee, "Time Warner Cable and Charter made no effort to trace equipment overcharges to their origin unless customers specifically asked them to and did not provide notice or refunds to customers," the report said. "Time Warner Cable and Charter did not automatically refund or credit customers for equipment overcharges they discovered. By contrast, Comcast and DirecTV provided full refunds to overcharged customers, and Dish’s sophisticated billing system is designed to prevent these types of issues from occurring in the first instance."

We all know that Comcast has overcharged many customers, but this Senate report indicates that Comcast does a much better job of issuing refunds than Charter, which is now the second biggest cable company due to its acquisition of TWC. Comcast told the subcommittee that it has a billing error rate of 0.3 percent.

Estimated overcharges were determined by comparing billing records with records showing what equipment and service customers actually receive. The Senate investigation found that "customer billing records do not always match customer equipment and service records, meaning that some customers are billed for items they have not ordered while others erroneously escape being charged for services or equipment they use."

Charter and Time Warner Cable have agreed to changes as a result of the Senate investigation, but while these changes could fix the problems going forward, they don't cover all the erroneous charges customers have paid over the years. From now on, TWC is performing monthly audits to find overcharges and providing automatic one-month credits to customers who paid too much for equipment or service.

However, "Time Warner [Cable] will not investigate when it began overcharging those customers unless customers bring specific concerns to the company’s attention," the report said. "Nor will the company automatically provide a full refund dating to when the overcharge began. But the company’s new policy will at least provide customers with notice that they have been overcharged, making it easier for overcharged customers to determine whether they should request a larger credit or refund."

Charter has promised to give customers a one-year credit for any equipment overcharges, the Senate report said. "In addition, Charter has implemented systemic controls that it claims will prevent equipment overcharges in the future. Although neither Time Warner Cable nor Charter’s new policies represent complete solutions to the problems highlighted during the Subcommittee’s investigation, they are a first step toward ensuring that they credit or refund customer overcharges."

Today's hearing was led by US Senators Rob Portman (R-Ohio) and Claire McCaskill (D-Mo.).

"Mistakes happen and we understand that," Portman said. "What matters in life is how you own up to your mistakes and make them right. What we discovered is some cable and satellite companies are better at doing that than others." The best solution would be to boost competition in pay-TV providers so that customers can switch, he said.

McCaskill related her own experience with her cable provider, saying that two years ago she learned that she was paying $10 a month for a service that was included in the basic package.

"I said, 'well, were you going to tell me this?' They said, 'no you have to call in and ask,'" McCaskill said. "If I hadn't called in and asked, that $10 could still be on my bill today based on the billing practices of the companies represented at this hearing."

Comcast Cable Senior VP of Customer Service Tom Karinshak pledged to improve the company's customer service today—just as Comcast Executive VP David Cohen did in front of a Senate hearing more than two years ago.

Not all senators were enthusiastic about grilling TV providers. Congress has an even worse customer service record than cable companies and thus may not have much wisdom to impart to them, Sen. Rand Paul (R-Ky.) said. Congress also uses bills that are hundreds or thousands of pages long, that are filled with confusing jargon, and that members vote on without reading, he said. "Unfortunately, you can't change your legislative provider," Paul said.

McCaskill countered Paul's view, saying that Congress' own poor performance "doesn't change our obligation to address things our constituents really care about."

In a recent Temkin Group report, ISPs and pay-TV providers tied with health plans for the lowest customer service rankings of any measured industry. Comcast was rated worst of all in its industry.

Disclosure: The Advance/Newhouse Partnership, which owns about 13 percent of Charter, is part of Advance Publications. Advance Publications owns Condé Nast, which owns Ars Technica.