Gas and electricity supplier npower has written to millions of customers to apologise after what was described by regulator Ofgem as a "serious deterioration" in customer service levels.
The German-owned energy giant admitted that a glitch resulted in a number of bills and statements failing to go out on time, direct debit payments not being set up properly and some customer accounts having problems being started.
In a letter to npower's 3.4 million domestic customers, chief executive Paul Massara pledged that anyone affected would not lose out financially as a result.
Npower will also donate £1 million to a fund for vulnerable customers, with half of this channelled to Macmillan Cancer Support.
Ofgem said it had been increasingly concerned about npower's customer complaint levels, which have risen sharply in the last year.
It welcomed the apology and payment, and said that after its intervention, npower had set out a recovery plan to ensure that service levels improve.
Mr Massara said the problems arose after customer details were transferred on to a new computer system. These then saw its helpline receiving extra calls resulting in longer waiting times for those trying to get through.
Around 700,000 customers are thought to have been affected by the problems, though it is believed the vast majority are not financially worse off.
Mr Massara said the issue was being dealt with as "our top priority", and hundreds of staff were working to address it.
Many customers affected had already been contacted individually to address specific problems and others would be, he added.
Anyone affected by payment problems as a result of the glitch would have repayment periods extended, Mr Massara said.
Sarah Harrison, Ofgem senior partner, said: "Many npower customers will have noticed a serious deterioration in service levels over the last year.
"The huge growth in complaints about npower is wholly unacceptable and is an issue that Ofgem takes very seriously and is why we intervened in this case.
"Npower's commitment that its customers will not lose out financially as a direct result of the company's billing system problems is important and we will expect npower to do all it can to identify and rectify such cases."
Research last month by Consumer Futures showed that npower had 202.5 complaints per 100,000, compared with 38.3 for SSE - the lowest level of the main energy providers - from the April to June period.
Npower recently announced a 10% average bill increase but has said that it will reduce bills as a result of a shake-up of Government green levies.