This article is more than 6 years old

This article is more than 6 years old

EDF Energy has become the latest of the big six energy suppliers to feel the heat of the energy regulator by paying out £3m to vulnerable customers after breaching complaints handling rules.

The French state-owned group has been punished 24 hours after the Labour party unveiled plans to revoke the licences of energy suppliers that repeatedly act against the interests of consumers.

Ofgem, the industry watchdog, has been investigating EDF after a 30% increase in complaints following the introduction of a new IT system. "EDF Energy failed to have sufficiently robust processes in place when they introduced a new IT system and this led to the unacceptable handling of complaints," said Sarah Harrison, senior partner for enforcement at Ofgem.

The £3m will go to a Citizens Advice energy scheme and a debt helpline.

The energy supply company, which is also behind plans to build Britain's first nuclear power plant in 20 years, admitted it had let down customers with sub-standard service.

"We have cooperated fully with Ofgem and have taken this matter very seriously. The £3m package that we are offering will ensure that thousands of vulnerable customers are provided with free, independent advice on debt, as well as information to help them manage their energy consumption and bills," said Beatrice Bigois, managing director for customers at EDF Energy.

Matt Ridout of independent price comparison site energyhelpline.com said Ofgem's action showed there was "nowhere to hide" for suppliers that were not providing appropriate service to customers.

"Poor complaints handling procedures, unacceptable call waiting times and technical difficulties due to IT failures are simply not good enough in this day and age, regardless of the excuse given," he said.

There has been a growing pile of fines or similar payouts ordered over the last 18 months, including from British Gas, SSE and Scottish Power.

A wider collapse of customers' trust and soaring energy costs has led to an investigation by the Competition and Markets Authority (CMA), taking place over the next 18 months. It will increase the pressure on the big six suppliers – British Gas, SSE, E.ON, EDF, npower and Scottish Power.

Ed Davey, the energy and climate change secretary, has backed the CMA inquiry and fought to bring down energy prices.

On Thursday, his Labour shadow, Caroline Flint, unveiled plans for a new regulator with the power to revoke licences and introduce an annual scorecard to monitor company behaviour.

Labour has also promised that if it wins power next spring it will freeze energy prices to "reset" the market.

This plan has been blamed by Paul Massara, the chief executive of SSE, for his company's failure to reduce household bills despite a 50% fall in wholesale gas prices since the start of the year. Massara said SSE would be unable to raise them again in response to increased costs if Ed Miliband won the general election.

"The potential Labour price freeze has, of course, also complicated all pricing decisions further," he said in a note attached to a formal submission to the CMA inquiry.

Ofgem has more than a dozen further inquiries underway into energy companies and has imposed more than £120m in fines or redress payments since 2002. The watchdog has the power to fine companies up to 10% of global revenues – about £2.5bn in for a company as big as Centrica, the owner of British Gas.