Npower, the energy company, has been accused of overcharging its gas customers by more than £100 million, paving the way for compensation for millions of people.

Consumer Focus, the consumer champion, has announced this week details of an investigation which shows that the energy company breached the terms and conditions of its supply licence, leading to a potential overcharging of large numbers of its customers.

A Consumer Focus spokeswoman says: “We believe the breach of contract, between April 2007 and April 2008, affected almost all of npower’s 2.2 million gas customers and the potential overcharge could be up to £78 per customer.”

The consumer group is now looking at ways in which a substantial number of npower’s gas customers might obtain redress, which has so far been denied them. If, as some aggrieved npower customers suspect, the overcharging is found to average close to £50 per customer, the energy company could be facing a compensation bill of more than £100 million.

The spokeswoman says: “We think npower should reopen negotiations on redress for its customers, but it has so far refused to do so. We now have to consider what other methods we could use to make it happen.”

The findings of the Consumer Focus study will come as a huge embarrassment to Ofgem, the energy regulator, which had investigated the same complaints earlier but failed to determine whether any overcharging had taken place. It confined itself to saying that npower had failed to notify customers of some tariff changes and that some of them might have suffered a small financial loss.

At the end of the Ofgem investigation npower agreed voluntarily to pay compensation totalling £1.2 million to 200,000 customers, an average of £6 a head.

Simon Hughes, the Liberal Democrat Energy spokesman, is writing to Ofgem asking it to reopen its inquiry into npower’s overcharging. He is also calling on npower to re-examine its calculations of how many gas customers it has overcharged.

He says: “Npower stands accused of some very serious failures, including failure to compensate large numbers of its customers, many of whom may not even be aware that they have been overcharged. It should be compelled to rectify this situation speedily.

“More widely, it appears that we need a new regulatory framework for the energy industry, which has some teeth, and a regulator that is prepared to use those greater powers in the interests of consumers.”

The question over npower’s alleged overcharging focuses on the number of units of gas it is allowed to charge at the higher of its two tariffs. In its contracts with customers, npower promises that it will not charge more than 4,572 units at the higher rate a year. Yet many Times readers have found that in 2007 — and in some cases in previous years — they were being charged for more units at the higher rate than the stated annual maximum.

David White, of Maidenhead, in Berkshire, says: “My contract, which I took out in January 2007, stated that I would be charged 4,572 units a year at the higher price and the rest at the lower price. But after 11 months I had been charged 5,939 units at the higher rate, meaning that I was overcharged by £41.”

Npower has argued that its promise of not charging more than 4,572 units a year refers not to a 12-month period, but to a “tariff year”. It starts a new tariff year whenever it changes its method of charging, so a tariff year can be shorter or longer than 12 months. In 2007 it changed its charging method twice, on May 1 and November 1, so the tariff year was one of only six months.

Npower told The Times in May 2008: “In our short tariff year of six months from May to November 2007 we didn’t charge anyone more than 4,572 units at the higher price, but over a full 12 months we did.” Mr Hughes says: “ Npower cannot say ‘a year is whatever we want it to be’.”

One reason why Ofgem’s investigation failed to uncover serious overcharging was that it related only from May to November 2007. If it had investigated a 12-month period, the extent of alleged overcharging would have become apparent. Ofgem has never explained satisfactorily why its investigation was so narrow.

The regulator has also sought to explain away its failure to mount a wider investigation by saying that because of statutory time limits, it would have been unable to fine npower.

However, Andy Beck, an npower customer from Teignmouth, in Devon, disputes this. “When Ofgem received the complaint in March 2008 it still had two months before the time limit ran out and could, among other things, have issued a ‘stop the clock’ order. What’s more, where it cannot act directly, it could pass its conclusions on to other people or organisations that could take the matter further,” he says.

Consumer Focus has also questioned claims made by npower in its marketing literature. In February 2007 npower launched a campaign aimed mainly at British Gas customers, boasting that its gas prices were being cut by 16 per cent. Consumer Focus reckons that when npower’s charging of additional higher rate units is taken into account the price reduction was only about 8 per cent.

A Consumer Focus spokeswoman says: “We are very concerned that npower claimed that it was the cheapest gas supplier in the market when it was not. The change in how it charged for gas meant that over the year it was, in fact, on average £10 more expensive than British Gas and £70 more expensive than Scottish and Southern Energy. We want to engage with npower to obtain a fair outcome for its customers but the company considers the matter closed.”

A spokesman for npower says: “We cannot comment on the Consumer Focus investigation until we have seen details of it. Our definition of a tariff year remains unchanged from last year. All our advertising campaigns comply with law and regulation.”

A spokesman for Ofgem says: “We were specifically asked to investigate a six-month, rather than a 12-month period. We didn’t issue a stop-the- clock notice because there wasn’t enough time to review the evidence. We didn’t accept npower’s definition of a tariff year, but it wasn’t the main focus of our investigation.”

What customers can do

If you think that you have been overcharged by npower . . .

- Complain to npower. You can call 0845 0704856 or write to the Complaints Team, PO Box 97, Peterlee, SR8 9AP. You may wish to download a template letter of complaint at timesonline.co.uk/ money/consumeraffairs.

— If the complaint remains unresolved, you can write to the Executive Complaints Team at Eighth Avenue, Team Valley, Gateshead NE11 0SX.

- If your complaint is still unresolved after eight weeks, or you are dissatisfied with npower’s final response letter, you can go to the Energy Ombudsman, PO Box 966, Warrington, WA4 9DF; 0845 0550760.

- For more information and advice, call the Consumer Direct helpline on 08454 040506.

- You can also obtain help from Disputer (www.disputer.com), the online tool to help people to manage a complaint.

- You could write to your MP, enlisting his or her help in seeking redress from the energy company.

- You can follow the example of Andy Beck (see above) and take out a claim for overcharging against npower in your local County Court. You can find out more at www.hmcourts-service.gov.uk.