Energy giant Scottish Power is to pay £8.5 million to customers after an investigation by regulator Ofgem found that the group provided misleading information through its doorstep and telesales agents.
The watchdog said that, between October 2009 and January 2012, Scottish Power provided customers with inaccurate estimations of annual charges and comparisons with their current supplier if they switched to the firm and failed to adequately monitor its sales staff.
Scottish Power has set up a £1 million compensation fund for those affected, while the remaining £7.5 million will be paid to more than 140,000 vulnerable customers, who will automatically receive payments of around £50 each by December.
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Ofgem said that, despite the sales practice failures, it found no evidence that Scottish Power deliberately set out to mis-sell to customers.
Scottish Power apologised "unreservedly" to those affected and said it had taken steps to address its failures.
The group stopped doorstep selling in June 2011 and has overhauled training and monitoring procedures for all telesales staff.
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The probe into ScottishPower comes as part of a wider market inquiry into mis-selling across the energy industry, which has already seen three investigations concluded.
SSE was fined £10.5 million in April for "prolonged and extensive'' sales practice failures.
Ofgem is still conducting two ongoing mis-selling investigations into npower, which was launched in 2010, and into E.ON, which was launched last year.
Scottish Power said that, of the households affected by mis-selling, around 50,000 potentially lost out financially and could be due compensation.
It estimates compensation payments will vary from between £5 and £30 for each gas and electricity service provided to households.
Ofgem warned: "Consumers can suffer financial detriment if they do not benefit from savings that they are led to expect - they may switch to a more expensive deal and competition suffers as consumers lose faith with the market and the value of switching energy supplier."
The energy regulator fined EDF Energy £4.5 million in March last year for misleading sales claims as part of the industry probe.