Co-operative Energy has agreed to pay £1.8 million to its customers for failing on service.
Part of the amount – £1.6 million – has already been paid while the remainder is due to be compensated to some customers.
The money the supplier is unable to return to consumers will go to charity StepChange, which will help energy customers who are in financial difficulties.
The fine follows a huge increase in complaints, caused by customers being unable to log into their accounts online, leaving them unable to submit meter readings or check their bill.
Bills were delayed as a result and direct debit updates stopped and new customers also experienced delay transferring to the supplier, most of which took a long time to resolve.
The issues were said to be the result of a new IT system in March 2015.
Since then, according to Ofgem, the supplier has worked well with the regulator to restore customer service levels and provide compensation to those who were directly affected by the problems.
Co-operative Energy also voluntarily withdrew from marketing activities to focus on improving its services to existing customers.
Martin Crouch, Ofgem Senior Partner said: “While customers experienced unacceptable levels of service, Co-operative Energy has done the right thing by taking responsibility for the situation and paying out compensation to those people affected.
“If trust is to be restored in the energy market suppliers must make amends to their customers when things go wrong. We want all suppliers to constantly ensure customers are treated fairly.”
Ben Reid, CEO of Midcounties Co-operative said the company has apologised to those customers who were affected by the IT problems.
He added: “As the UK’s only member-owned energy supplier, we put our customers at the heart of everything we do and their interests first… The system issues are now resolved and we have made significant improvements to our service.”
Two of the Big Six bosses, Alistair Phillips-Davies, CEO of SSE and Gab Barbaro, Managing Director at British Gas Business, will be speaking at Energy Live 2016 next Thursday. There are limited free tickets for energy end users and university students.