Ofgem, the energy regulator has proposed extending 'price controls' on energy companies for a further three years, after Government pressure to reduce carbon emissions in the sector.

The initiative, amongst others, was released in a document entitled 'Regulating Energy Networks for the Future'.

'Price controlling' which was introduced in 2006 ensures that energy companies do not raise prices unfairly by guaranteeing the amount of investment on 'low-carbon' initiatives when prices are raised.

In 2006 for example, the agreed price raise of 6 pct per month led to a £5.7 billion investment in amongst other things - green energy, and the proposals outlined today hope this will continue in order to meet further investment need.

"We are looking at how best to regulate energy network companies to enable them to meet the challenges and opportunities of delivering the networks required for a sustainable, low carbon energy sector. There is considerable uncertainty about the best way to meet these challenges whilst delivering value for money for existing and future consumers." said Ofgem's document.

Their proposals include penalising poorly performing companies, rewarding better ones with 'fast-track' pricing, and allowing new networks in to deliver large-scale projects.

The regulator says there is £32 billion required in order to meet future low-carbon commitments.

Shares in FTSE 100-listed energy companies meanwhile rose on the news. National Grid, Intl Power and Scottish and Southern Energy all rose by 0.59 pct, 1.07 and 0.51 pct respectively, whilst British Gas owner Centrica was the only one to fall, down by 0.77 pct.