It follows an investigation launched by Ofgem last November after SSE reported the issue to the regulator.
Ofgem found between June 2014 and September 2015, the Big Six company sent 1.15 million statements to 580,000 PPM customers with inaccurate information on the alternative cheaper tariff available to customers as well as inaccurate estimates of how much they could save annually by switching to them.
Some statements also overestimated the annual savings the customers could make by changing their PPM to a standard credit meter paying by direct debit as well as by moving to paperless billing.
The regulator said SSE failed to act promptly to put things right by not identifying the issue at an early stage.
It, however, added the level of harm was “low” as only a small proportion of those customers would have acted on the information by switching.
It confirmed SSE has since improved its processes to prevent this from happening again.
The money will be put into Ofgem’s consumer redress fund administered by the Energy Savings Trust, which support people in vulnerable situations as well as the development of innovative products or services that are not currently available.
Gareth Wood, Director of Customer Service Operations at SSE said: “We deeply regret the historic problems we identified with some annual statements for prepayment customers, relating to a coding issue between 2014 and 2015. We proactively reported this to Ofgem once we began aware and as Ofgem has recognised, we’ve put things right and now have stronger measures in place to help ensure it doesn’t happen again.
“Although we’re disappointed not to have met the high standards expected of us in this instance, we’re pleased that the matter has now been closed with a voluntary payment that will directly benefit vulnerable customers.”