Contact Energy has agreed to pay back money to 25,000 customers it admits it overcharged, the Commerce Commission says.
The commission says Contact Energy failed to carry over customers' prompt payment discounts to their final bill when they closed their account between April 2008 and April 2011.
The total sum to be refunded is $280,000.
The commission says Contact Energy has adopted a compliance programme to ensure it meets fully the requirements of the Fair Trading Act.
The case was settled out of court.