Ofgem has fined npower £2 million in the second heavy fine levied on the "big six" energy firms over complaints handling.
The energy regulator had earlier fined British Gas £2.5 million in July for mishandling customer complaints and is also currently investigating the way EDF Energy handles its complaints.
"Consumers have a right to expect that energy companies will comply with the standards," said Sarah Harrison, Ofgem's senior partner for sustainable development.
"Npower failed to do so and, although it took remedial action, it has incurred a penalty for failing consumers."
Ofgem said npower failed to record all details of the complaints it received, did not give customers enough details of the redress service offered by the energy ombudsman and failed to put in adequate processes to deal with complaints.
It said the fine would have been higher had the company not admitted the breaches of regulations and taken action to improve its complaints procedures.
Npower, which is owned by German group RWE, is the UK's fourth largest provider and supplies about 3.3 million customers.
This month it put up its average tariffs for gas by 15.7 per cent and electricity by 7.2 per cent because of rising wholesale power prices.
The firm was fined £1.8 million in 2009 by Ofgem for mis-selling after complaints from customers about its doorstep sales team.
"It is welcome to see Ofgem willing to hammer home the point that unless energy companies start treating consumers fairly there will be a price to pay," said Adam Scorer, director of external affairs at consumer rights group Consumer Focus..
"Customers need to be confident that suppliers will deal with their complaint quickly and fairly and that there will be consequences when they don't play fair.
"Consumer Focus is particularly concerned that energy companies seem to avoid directing customers to the energy ombudsman.
"The ombudsman is the essential backstop if a company cannot or will not sort out someone's problem."