Spark Energy, which supplies energy to tenants who are signed up by letting agents, has agreed to pay a £250,000 penalty to Citizens Advice after a probe by regulator Ofgem.

Ofgem found that Spark had deliberately blocked requests to switch to a different supplier between June 2010 and May 2013.

During that three-year period up to 29,000 households had to pay high and inaccurate bills and put up with terrible customer service.

The Ofgem investigation said that the only customers who left Spark were some 705 who were in debt. The company switched them to different suppliers without their knowledge.

Ofgem said: “Customers would not know the transfer had been completed or the identity of the new supplier until they received a welcome letter or email from the new supplier.”

Ofgem also found that Spark failed to return money promptly to customers who were in credit and failed to deal with complaints.

Citizens Advice referred Spark Energy to Ofgem and said that the outcome of the investigation should serve as a warning that “energy firms cannot get away with pulling the wool over their customers’ eyes”.

Chief executive Gillian Guy said: “Customers received staggering bad service. Some were stopped from switching and others chased for eye-watering shock bills.”

A spokesman for Spark Energy said: “We welcome the manner in which Ofgem has dealt with these issues. We’ve learned valuable lessons from this process and recognise there were things we should have done differently, and we apologise for these failings.

“However, we’re pleased Ofgem has recognised the progress we’ve made over the past 21 months to transform our levels of customer service in this complex and difficult market.

“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.”

One of the industry’s most respected names, Nick Leeming – who founded Propertyfinder, now Zoopla, and is chairman of Jackson Stops & Staff – is also a relatively recent appointment, becoming a non-executive director of Spark.