Ofgem has launched a new price review regime which seeks to encourage better investment and innovation in gas and electricity markers.
The industry regulator said that the new system, which is called RIIO (Revenue=Incentives+Innovation+Output), will help incentivise energy suppliers.
According to the watchdog, the regime will support companies in their quest find more than £30 billion worth of investment in the next decade.
This will assist them with their environmental targets and will also help consumers make the most of cheap energy services.
Ofgem chief executive Alistair Buchanan said: "It is important that Ofgem sets companies a clear incentive framework to deliver the necessary investment and innovation as cost effectively as possible for consumers.
"It is now up to companies to rise to the challenge. They must set out by the end of July how they are going to ensure safe, reliable networks with high levels of customer service while delivering the investment necessary to meet the needs of a low carbon economy."
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