Labour will next week pledge to end the dominance of the big energy firms by allowing anyone to "buy" wholesale gas and electricity and sell it to consumers.
Its leader, Ed Miliband, is due to outline, at the Labour Party Conference, his desire to adopt as "simple tariff" system, as recommended by the Consumers Association. This, he is expected to say, would make it easier to compare prices and could force down prices for 80 per cent of five households.
The energy market is dominated by six companies – which produce and supply gas and electricity. Under Labour's system, all energy would go into a central "pool" to be bought by anyone at a clear and transparent price.
The move would mean that supermarkets or other firms could enter the supply market and this, the party hopes, would force prices down. Official figures are expected to show that combined electricity and gas bills for households have risen 46 per cent, to £1,280 per annum, since 2007. Over the last few months, all of the major energy suppliers have put up prices in the face of rises in wholesale energy markets.
But there is concern that when wholesale prices fall any savings are not always passed on consumers.
Yesterday, for the first time, three of the big six power companies indicated that they were in favour of a competition inquiry into the market as a way of restoring customer confidence. Previously they opposed such an investigation but had a change of heart after Chris Huhne, the Energy Secretary, accused the industry of predatory pricing.
Volker Beckers, chief executive of RWE npower, said clarity was needed and that if a Competition Commission inquiry achieved that "we should get on with it. We have nothing to hide."
A Labour source said that Mr Miliband was keen to use his announcement next week to underline Labour's commitment to middle-income families.
"People who work hard are not being rewarded ... while firms, from powerful electricity companies to banks and train firms, seem to do what they want. We hope to show Labour is the voice of the hard-working majority," he added.Reuse content