AN energy supplier is facing a large fine after misleading 35,000 customers into signing up to a price freeze promotion that actually increased their bills.

Teesside Magistrates' Court heard yesterday how householders across the North-East were tempted by an npower offer urging them to: "Freeze your energy prices. Act now to avoid price increases."

However, after thousands signed up, they discovered that their bills had gone up by five per cent.

In mitigation, the company told the court they warned customers by phone to expect an increase before having their prices fixed.

Keith Wilson, representing Middlesbrough Council's trading standards department, said: "Their promotion said customers' domestic tariffs would be frozen until the end of the year.

"In fact, this was far from the truth, and customers were to be placed on a tariff that was more than they had previously paid.

"The company tells us its sales staff were told to inform people their bills would rise, but customers say this was not the case."

Npower representatives pleaded guilty to a charge of false advertising arising from its promotion, from January to December last year.

Kevin Miles, npower northern residential director, said: "I would like to apologise to customers."

The problem affected Northern Electric customers who had been paying less than npower consumers, he said.

Magistrates ruled their sentencing powers - a maximum £5,000 fine - were insufficient and sent the case to crown court for sentencing at a later date.

Npower said afterwards: "We have reinforced the checks and balances in our campaign procedures to help ensure this doesn't happen again."