Customers of an energy provider have been caught up in a billing bungle leaving many facing hundreds of dollars in unexpected charges.

In an email to affected users obtained by 7NEWS, power provider Amber Electric said the system had failed to calculate wholesale usage rates correctly, resulting in customers being undercharged.

“Approximately 20 per cent of our customers have been impacted by this error,” Amber’s co-CEO Chris Thompson wrote to affected users.

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The error stems from a third-party billing system Amber switched to two months ago, but these customers are now facing back payments of several hundred dollars.

One user, who asked not to be named, told 7NEWS exclusively they were charged just 0.86 cents per kilowatt hour (c/kWh) in one billing cycle when the correct rate should have been 36.30 cents.

This alone resulted in a $280 adjustment on their bill.

In total, they were undercharged by nearly $400 over two months and are now expected to repay the sum across two future bills.

Amber said the glitch affected customers with controlled-load supply or older-style accumulation meters, and the company is now working with the third-party provider to fix the issue.

In the statement to customers, Thompson acknowledged the error and apologised, saying the company takes billing accuracy seriously.

“We will also be implementing further automated testing on our side to ensure this doesn’t happen again going forward,” the company said.

While the provider has offered a $25 account credit and the option of a payment plan, some customers said they’re frustrated the financial burden is falling on them and not the company or the third-party system that caused the error.

“What an absolute kick in the guts on top of all the other cost of living pressures at the moment, this is the last thing we need,” an affected customer, who has been with the power provider for nearly two years, told 7NEWS.

“If they cant run their books properly that’s not my problem, they should cop the cost and apologise for the distress this has caused.

“Forcing customers to pay for their incompetence is just crazy, a token apology email just doesn’t cut it.”

Amber said it needs to recover lost charges, claiming its only profit comes from a flat monthly fee of $25 and not from electricity usage or supply charges.

“We’re really disappointed with this error, and I want to take the chance to personally apologise to you for being caught up in it,” Thompson stated in the email.

“We take the trust our customers place in us extremely seriously, and a big part of that is that you can trust that the bills we send you are accurate.

“We do need to make sure we pass through the corrected amount to you to ensure we are financially sustainable,” Thompson said.

“As a young, innovative company, we’re building something different in the energy market, and with that comes a level of complexity in our systems that isn’t common in the industry.

“That complexity is what allows us to deliver wholesale pricing and greater value for customers.

“We’re really disappointed this has happened. When issues arise, our priority is to find and fix them quickly, learn from them, and be upfront with customers about what went wrong and what we’re doing to make sure it doesn’t happen again.”

Energy retailers are allowed issue back bills to recover undercharged amounts, but must follow strict rules, the Energy & Water Ombudsman NSW states in their website.

This includes not charging for usage beyond nine months, not adding interest, clearly explaining the charge as a separate item, and offering customers equal time to repay, up to 12 months.