Tens of thousands of npower’s electricity customers may have been overcharged and could be due hundreds of pounds of compensation, an investigation by Times Money has discovered.

Consumer groups have urged customers to check their bills after a county court awarded one npower customer compensation of £446 after he successfully argued that the company increased his direct debit payments unfairly by basing his average consumption patterns on an 18-month period that included two winters.

Ed Mayo, chief executive of Consumer Focus, the independent consumer body, says: “This case highlights some disturbing things. It shows that consumers should not assume that energy companies always get things right. They don’t.

“We would urge consumers to check their bills and complain if they think that a mistake has been made. We would also advise them to double-check that they have been given all the discounts to which they are entitled, because energy companies are often slow to provide them.”

The accusation of overcharging comes only months after npower was forced to pay more than £1.2 million in compensation to gas customers after failing to inform them of changes to billing tariffs.

The problem with the company’s electricity charges came to light after a Freedom of Information request to Ofgem, the energy regulator. The documents supplied showed that one disgruntled customer — Kim Stephenson, above, of Warfield, Berkshire — took npower to court to obtain redress for overcharging on his electricity bill. Mr Stephenson’s victory, which npower sought to keep quiet, could open the way to claims from the company’s 3.5 million electricity customers.

Mr Stephenson’s problems with npower started in 2006 after he signed up to take electricity and gas from the company and pay by direct debit. The salesman who persuaded Mr Stephenson to switch to npower looked at his previous electricity usage and worked out that he should be paying £30 a month. But once Mr Stephenson was signed up, npower raised its estimate of his consumption to £44 a month without explaining how it arrived at this higher figure.

After further inquiries, Mr Stephenson discovered that npower’s new and higher estimate was based on 18 months of consumption, which covered two winters but only one summer. It also failed to take into account the £60-a-year discount for which he was eligible as a direct debit payer.

In an e-mail to npower, Mr Stephenson said: “You are quite clearly inducing people to pay you money by giving false figures, while your actual practice is to charge considerably more.”

In an e-mail to Ofgem, Mr Stephenson said: “Npower’s bill calculation appeared to be based on an 18-month estimate of future consumption that was 50 per cent higher than my actual usage.

“What npower has done is have a system that artificially inflates the monthly payments so that npower has a massive cashflow surplus and effectively uses customers as a source of interest-free loans.”

Mr Stephenson’s claim comprised several elements, including overcharging, an unpaid discount and court fees, plus costs. But he believes that many, if not all, of npower’s electricity customers could be paying too much for their energy.

He calculates that if npower is taking an extra £10 to £15 a month for each electricity customer, that would give the company about £120 to £150 of advance payments every year, on which it can collect interest. Even if npower sorted out the overcharging at the end of the year, the company would still be pocketing an average of between £3 and £4.50 a year in interest (based on 2007 rates) from each customer. Given that npower has about 3.5 million electricity customers, that would mean npower could be raking in between £10.5 million and £15.75 million in interest, even if it refunds the overpayments at the end of the year.

Mr Stephenson is also concerned that npower goes to extraordinary lengths not to put any confirmation of its policy in writing. He says: “It will always attempt to ring you and discuss the matter verbally rather than put anything on paper. It could have kept things out of the court if it had provided me with a written explanation of its policy, but it chose not to. It did not even attempt to defend its position in court.”

As a result, Mr Stephenson obtained a judgment in court early last year for £446 against npower, but the company refused to pay it. He then secured a warrant of execution, which would have enabled bailiffs to seize goods at npower’s Swindon head office, at which point the energy company paid up.

An npower spokesman says: “We have reviewed Mr Stephenson’s case and we are confident that proper procedures were followed in setting up his direct debit. The e-mail from the customer adviser, which says that 18 months were used, is not consistent with the calculation of £44 a month. We can only conclude that an error has occurred on this occasion.

“Mr Stephenson was offered a choice of the newly calculated rate, the original rate as quoted by the salesperson or, indeed, an option to return to his previous supplier. We chose not to contest Mr Stephenson’s case as it would have cost more to do so than the money that was outstanding. The costs were awarded automatically.

“In all instances we strive to reach a zero balance for direct debit customers after 12 months. However, there are many factors that affect usage.”

Meanwhile there is growing pressure on Ofgem, the industry regulator, to explain why it has not taken a tougher line with npower over its treatment of gas customers. This year Ofgem ordered the energy company to pay an average of £6 to 200,000 customers because it had charged them too much on their gas bills.

But npower customers say that the compensation figure should have been much higher and should have applied to many more people.

They argue that npower breached its contract terms by charging many of its 2.2 million customers more units a year at the higher of its two rates than the stated maximum of 4,572 units. They want to know why Ofgem did not look more closely at this alleged breach of contract when it conducted its investigation of the company.

A spokeswoman for Consumer Focus, the independent consumer body, said that it, too, was concerned that Ofgem had not tackled the question of npower charging more than its stated maximum number of higher-rate units in a year. She said: “If a company makes changes to its contract without giving proper notification to the consumer, that is a potential breach of its licence requirement and something that we think Ofgem has the power to investigate. We have asked Ofgem why it has not investigated this and are pressing for a reply.”

Npower says that it delivered its price cut as promised and referred any further questions about alleged overcharging to Ofgem.

We would like to hear from any readers who are planning to contest npower’s charges. E-mail us at weekendmoney@thetimes.co.uk

How to make a claim

In England and Wales you start by filling in a claim form. These are available from local county courts legal stationers and on the internet.

Take or send two copies of the completed form to the court where you want to start the action. Claims for less than £5,000 can be dealt with under the simplified small claims process. You pay a court fee on a sliding scale starting from £25. Usually, the court will serve notice of the claim on the defendant, though you can serve notice yourself if you wish.

The defendant has 14 days to respond after receiving the claim.

If the defendant accepts your claim and pays you directly, that is the end of the matter. If a defence is received, the case will proceed to court. If not, the claimant wins by default.

Where a defence is received on time, both parties will receive a questionnaire. The answers given will determine whether the case is heard under the rules for small claims and the time, date and place of the hearing.

The court hearing is informal and both sides are allowed to bring along a lay representative to assist them and speak on their behalf.

At the end of the hearing, judgment is delivered, with reasons for the decision.

There is limited scope for appeal. If the claimant wins, he or she will get back the court fees, along with the claim award. The claimant can also ask for modest expenses.

To make an online claim, go to moneyclaim.gov.uk.

Power failure

In May last year Times Money uncovers flaws in npower’s billing system and the matter is referred to Ofgem, the industry regulator.

In October Andy Beck wins £1,375 claim for overcharging. Npower settles in full only days before a court hearing.

In December Ofgem fines npower £1.8 million after finding that the company failed to prevent doorstep mis-selling.

In February Ofgem tells npower to repay a total of £1.2 million to 200,000 customers who lost out after not being properly notified about tariff changes.