Spark Energy has been ordered to pay £250,000 for breaching regulations on switching and complaints handling.
Ofgem said the energy company wrongly stopped customers switching to other suppliers and transferred certain customers without their consent to stop them building up more debt with the firm between June 2010 and October 2013.
The regulator launched an investigation in June 2013 following complaints that included billing, refunds and customer transfers.
Spark Energy will pay the amount to charity group Citizens Advice, which will provide help to energy consumers.
Ofgem said the supplier has made “significant progress” since the investigation.
Sarah Harrison, Senior Partner in charge of enforcement at Ofgem said: “The fact that Spark’s problems occurred when it was establishing itself in the market is no excuse for not complying with its obligations.
“The £250,000 reflects the seriousness of the breaches but also Spark’s size and that during the investigation it has worked hard to resolve the issues identified.”
Spark Energy apologised for its failings and said it has learned “valuable lessons” from the process.
A spokesperson added: “There has been a wholesale restructuring of the business and an overhaul of key personnel, including the appointment of a new CEO, a new director of compliance, a new head of legal and a new head of customer service.
“We’ve also invested £2.5 million to double our customer care team from 60 to 120, overhaul training and introduce state-of-the-art IT systems.”
The UK Government has launched a campaign aiming to encourage energy consumers to shop around, switch suppliers and save money.