Bosses from the UK's main power firms told MPs on Tuesday that energy bills will rise this winter.
Energy bosses said wholesale oil and gas prices could add as much as £400 to the average fuel bill this year.
Ian Marchant of SSE told MPs prices could rise by as much as 40 per cent.
Rupert Steele, director of regulation at ScottishPower, said: "The whole industry figures will have to rise significantly."
Wholesale gas prices are closely tied to the price of oil, which hit a record high of just under $140 a barrel this month.
They told the cross-party business and enterprise committee that millions of customers may be paying too much for power because of the flawed European energy market.
Mr Steele said: "We remain concerned that European markets, especially in gas, are not as open as they should be and that the market is not clearing efficiently between the UK and the continent."
The lack of transparency was inspiring additional volatility in gas prices in Britain and "possible excess profits for gas producers", the ScottishPower director said.
Chief executives from British Gas, EDF, npower, E.ON, ScottishPower, and Scottish & Southern Energy were present at the committee meeting.
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