The energy watchdog today warned electricity and gas may become unaffordable for an increasing number of households unless drastic action is taken.

Ofgem states failure to reform the energy system could mean power shortages after 2015, while inaction will lead to a "degree of crisis" in three or four years.

It has predicted average household bills could jump during the decade as much as 25% - to nearly £2,000 - without radical moves (see the Cheap Gas & Electricity guide).

Ofgem chief executive Alistair Buchanan says: "We need to turn over all the stones with regard to the possible solutions that the Government can address."

The regulator believes £200 billion of investment is needed in the next 20 years to ensure future supply, warning even the least of its suggested policy measures would require "significant changes" and the most radical was a "dramatic move away from competitive markets".

Today's document from Ofgem says: "The higher cost of gas and electricity may mean increasing numbers of consumers are not able to afford adequate levels of energy to meet their requirements."

The Government says it will be able to meet power needs in the years ahead, despite the watchdog's warnings of "reasonable doubt" over the security and sustainability of Britain's energy.

Further reading/Key links

Slash energy costs: Cheap Gas & Electricity
Your rights: Fight Energy Direct Debits