Energy companies are overcharging customers by as much as £1 billion a year in defiance of European Union rules, it was claimed last week.

Lawyers said the breach could lead to consumers taking their utility firms to court to reclaim hundreds of pounds, in an echo of last year’s revolt over bank charges.

The 10m customers who pay by cash or cheque every quarter are being charged £699m more than is justifiable, according to a report from a committee of MPs last week. Pre-payment meter customers, including those with second homes, are paying up to £400m more.

The excess is in breach of an EU directive which states that any difference between payment methods should reflect the cost to the supplier. This is only £20 even though suppliers charge up to £69 more, MPs say.

Graham Kerr of watchdog Energywatch said: “I expect consumers to demand lower payments or even ask for a refund in the same way as bank-charge customers.”

The MPs on the Business and Enterprise committee called for suppliers to be forced to lower tariffs through price controls if they fail to act in 12 months.

This follows British Gas’s decision to raise gas bills by an average of 35% and electricity tariffs by 9%, increasing the average bill by about £267 a year — the highest ever single increase. About 1.6m of the firm’s customers who pay by direct debit have seen a steeper increase of 42%. Customers in London, the Midlands and East Anglia have suffered a rise of almost 44%.

The energy giant, which has nearly 16m UK customers, blamed the rise — its second in six months — on increases in wholesale energy prices since last year of up to 89%. EDF set the ball rolling this month when it raised gas by 22% and electricity prices by 17%. However, unlike British Gas, the French supplier has not committed to keep prices on hold until the end of the year. The remaining four big energy firms are expected to follow suit.

Customers who pay by cash or cheque every quarter, also known as standard credit customers, are charged an average of 11% more for their energy — or £89 a year extra a year, according to the MPs. The report said: “The ‘Big Six’ are on average overcharging pre-payment customers by £59 a year, and those on standard credit by £69.”

Tom Brennan of Atlas Chambers, the law firm that initiated a surge in bank-charge claims last year, said the excess charge was in breach of EU directives set out in 2003. “If the MPs’ report is correct, then it would seem energy firms are in breach of their duties,” he said. “It would suggest the consumer could and should bring these claims to a court if they cannot obtain a refund from their supplier.”

Consumers would be able to claim back for four years of overpayments. With 3.64m pre-payment and 10.14m standard credit customers in Britain, the potential cost to energy firms could be more than £3 billion.

Regulator Ofgem will publish its investigation into energy firms next month.