Energy competition probe 'will increase risk of blackouts'

Mr Atherton said ministers hoped new power stations, including gas-fired plants and wind farms, would be built ready to start generating and ease the problem in 2016-17.

But that investment is already in doubt because of policy uncertainty and “a CMA inquiry would put another very substantial dampener on the big companies’ enthusiasm to invest,” Mr Atherton said.

He said the companies covered by the inquiry would “substantially rein in their UK investment plans” until they knew the CMA’s findings and that the uncertainty over the future shape of the energy market “would also likely dampen investment from those corporates not directly involved in the inquiry”.

Ministers and some energy companies are believed to be hopeful that an ongoing investigation by the CMA could stymie Labour’s plans to implement its own overhaul of the market and a price freeze if it wins the 2015 election.

But Caroline Flint, Labour’s shadow energy secretary, insisted the party would not wait for the outcome of the CMA review and would push ahead with its own reform plans for the energy market regardless if elected.

"The next Labour government will undertake the biggest overhaul of our energy market since privatisation. Our plans will break up the big energy companies, put an end to their secret deals and make tariffs simpler and fairer," she said.

Some energy companies including E.On and EDF have actively pushed for a CMA investigation, suggesting it will prove the market is competitive.

But others such as British Gas owner Centrica are opposed to an inquiry. Ed Davey, the energy secretary, has suggested British Gas may have too dominant market share and that an inquiry should consider whether it needs to be broken up.

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