The household energy supplier currently rated top for customer satisfaction is facing a regulatory inquiry into consumption information which has potentially led to inaccurate billing.
Ofgem said it was examining Ovo Energy, which has more than one million homes on its books, to see if it breached its licence conditions.
The watchdog said the scope of the probe would include estimates the firm gave customers about how much energy they used during winter 2016-17, and the accuracy of the annual consumption figures included in statements.
Ofgem said: “Incorrect consumption figures can lead to customers receiving inaccurate bills, annual statements and other important information.
“This in turn can lead to customers being unable to properly manage their accounts and deciding to switch based on incorrect information.”
Ofgem said the opening of the investigation did not imply “that we have made any findings about non-compliance by Ovo Energy”.
Ovo Energy launched in 2009 with a mission to challenge the dominance of the ‘big six’ suppliers.
Growth in competitors and controversy over standard variable tariffs – the latter described as a “rip-off” by the Prime Minister – has seen the major firms largely bleed customers to cheaper rivals as switching rates have improved.
Ovo, which has welcomed the prospect of a price cap on default tariffs, has topped a customer service table provided by the consumer group Which? for the past two years.
It responded to Ofgem’s announcement by saying: “We have a great track record in customer service and are always open to ways to improve it.”