Ofgem, the energy regulator, has today announced an investigation into the way npower charges its gas customers, following allegations of unfair billing by Times Money.

Three weeks ago we highlighted readers’ complaints that they were being overcharged on their gas bills by the UK’s fourth biggest energy supplier. They said npower was charging more units of gas at its higher rate than the agreed figure of 4,572 units per annum.

Npower’s response was that the promise not to charge more than 4,572 units at the higher rate referred to a ‘tariff year’ which was not always the same as a calendar year. The company starts a new tariff year each time it changes its tariffs and this resulted in a tariff year of just seven months in 2007.

Now Ofgem has decided that there is sufficient evidence to mount an investigation into the npower’s methods of charging. It is already conducting a separate investigation into alleged mis-selling by npower staff.

Meanwhile Andy Beck, of Teignmouth, Devon, who was one of the first to alert Times Money to the billing problem, has obtained from npower a detailed breakdown of the month-by-month number of gas units that the company was charging at the higher rate in the year April 1 2007 to March 31 2008. After starting with 448 units in April, the number fell slightly to 381 units from May to October, before jumping to 882 units from November to February, and then ending with 272 in March. This comes to a total of 6534 units - 1962 units more than the stated figure of 4,572 units per annum.

Mr Beck, a semi-retired bathroom installer, says: “This means that npower are charging a lot of people 1,962 units too many at the higher rate when they should be charging those units at the lower rate. The difference between the two figures is going to be worth between £75 and £90 to customers who have been with npower over those 12 months.”

Energywatch, the energy watchdog, reckons that up to 2.2 million npower customers could have suffered from the same problem that Mr Beck and other Times Money readers have identified, which means the total amount overcharged could be as high as £198 million.

Npower has admitted that some customers have been charged more than 4,572 units at the higher rate in a calendar year. But a spokeswoman adds: “We think this is counterbalanced by our price reductions, which took place at the same time.”

But Mr Beck says: “Npower only reduced the lower tier price rate, which would make no difference to what they charged for the higher rate units and doesn’t excuse them for breaking their contract.”

Have you been overcharged by nPower?

Download our template letter of complaint here