OVO Energy has been ordered to pay millions in compensation.
The penalty comes after nearly 12,000 vulnerable customers faced long delays in receiving support through the Warm Home Discount scheme.
Energy regulator Ofgem announced that OVO will pay £2.77m in compensation after issuing the rebates more than 19 months late.
The £150 rebates should have been delivered by March 31, 2024, but were not paid until November 2025 due to a system error.
Ofgem has directed the energy supplier to compensate affected households directly, including £150 for all impacted customers, an additional £150 for medically vulnerable individuals, and £100 for those who experienced self-disconnection between March 31 and May 31, 2024.
Neil Lawrence, director of delivery and schemes at Ofgem, said: "The warm home discount is a vital source of support for vulnerable energy consumers.
"Delays of this magnitude can cause real harm, particularly for those experiencing fuel poverty who also have medical needs.
"Failures of this kind are unacceptable, and we will continue to intervene where necessary to ensure customers receive the support they are entitled to."
The majority of affected customers were classed as vulnerable, with 7,726 listed on the priority services register and 4,066 identified as medically vulnerable.
Under the government scheme, energy suppliers spent a total of £578.7m supporting low-income households last year.
Ofgem said that OVO’s failure was due to an internal system error. The company reported the issue to the regulator voluntarily and has since made changes to its processes.
A spokesman for OVO said: "We’re very sorry that some customers did not receive their warm home discount payments on time.
"We have worked closely with Ofgem to understand what went wrong and to put measures in place to ensure it does not happen again.
"We did not meet the high standards of service we set for ourselves, and all affected customers have now been compensated."
Ofgem acknowledged the steps OVO has taken to address the problem and improve its systems to prevent a recurrence.
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