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 e

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