Power market shake-up ‘to limit fuel bill rises’

But critics said the measures to attract billions of pounds of investment to overhaul the UK’s “creaking” energy system were skewed in favour of nuclear power and the “Big Six” energy firms at the expense of renewables.

The draft Energy Bill will introduce long-term contracts that pay a steady rate of return for energy over the lifetime of new low-carbon generators, to overcome the high capital cost of building nuclear power plants or offshore wind.

The Government hopes the reforms will deliver on cutting greenhouse gas emissions, reduce consumer exposure to volatile gas prices and imports and lower the risk of black-outs as ageing power stations go offline.

The changes are designed to deliver £110 billion to be poured into power plants, wind farms and the grid over the next decade.

Officials say energy bills are set to rise with or without reforms to the electricity market, largely owing to increases in the price of fossil fuels. By 2030, average bill could rise by £200, but with the electricity market reform that increase could be halved to around £100, the Government says.

Labour Leader Ed Miliband said: “Of course there needs to be investment in energy, but consumers need to know they’re getting a good deal. I’m afraid what the Government has done so far is resist our plans to break up the way the big six energy companies work, to try and get prices to be better for consumers, and bring lower tariffs for the elderly.