OFGEM wants tougher laws on energy suppliers merging

The regulator urged competition authorities to consider carefully the impact of network takeovers on consumers and their bills. It wants network operators such as National Grid and EDF to face the same tough restrictions on mergers and takeovers as water companies.

Any changes to current rules and regulations may come too late to halt a sale of EDF's electricity distribution business to one of its rivals. The energy company is currently assessing a number of bids.

Any overhaul of market regulations could be included in a new energy Bill announced yesterday in the Queen's speech.  Also including energy efficiencency which should lead to cheaper business electricity.

Mr Hendry the new energy minister confirmed that the UK's "Big Six" gas providers are now likely to be forced by law to make sure the country has enough energy in storage not to suffer power cuts. He added that the Government was "very unlikely" to push for national supplies of gas and ruled out a centralised "national energy buyer" – a concept suggested by Ofgem earlier this year.

However, Mr Hendry said his department still believes that a more "interventionist approach" is needed in the energy market rather than the "laissez-faire" method of the previous Government.

Other measures included in the new Bill are handouts to homeowners to make their houses more energy efficient and an overhaul of Ofgem's role as regulator. The Government will also place new restrictions on carbon dioxide emissions from coal-fired power stations.