Synergy has come under fire for a second time this year after admitting to taking $40 million from Western Australia customers.

The state-owned utility is blaming a “system failure” for the error as they work to pay back hundreds of thousands of people.

“This isn’t good enough, it’s not acceptable and we’ve let our customers down,” Synergy chief executive Kurt Baker said.

The provider collected overpayments from accounts that were meant to be closed, impacting 174,000 customers – both residential and business.

The payments date back to 2009 for amounts ranging from $1 to tens of thousands of dollars.

“Our systems and our processes should identify that, but they haven’t, so our systems have let us down,” Baker said.

He reassures customers they’ve now been stopped but wouldn’t reveal exactly when Synergy discovered the blunder.

“We’ve only concluded that in recent times,” he said.

It’s expected to take several months for customers to be reimbursed but Synergy’s CEO said the company had hired extra staff to speed up the process.

“It is completely unacceptable that this has happened and those people that have overpaid need to get their money back asap,” state minister Reece Whitby said.

It isn’t the first time Synergy has slipped up.

In March, it was found that close to 3000 vulnerable customers using Centrepay had copped overpayments on closed accounts, with the automatic deductions taking out a total cost of $2.29 million.

“This is an issue of trust, the people of Western Australia have to be able to trust that their government departments are doing the right thing by them, and in this case, that trust is being lost,” opposition energy minister Steve Thomas said.