Alistair Buchanan, chief executive of Ofgem, warned consumers to prepare for higher prices as power plants close and the UK will be forced to buy more gas from abroad.

As it stands, a tenth of the nation’s electricity generation capacity is being phased out earlier than planned.

This comes at a time when demand from China increases by 20% annually and Asian gas is said to cost 60% more than those bought from the UK.

Buchanan warned in the Daily Telegraph, ahead of an industry lecture today: “We have to face the likelihood that avoiding power shortages will also carry a price.”

“If you can imagine a ride on a roller-coaster at a fair ground, then this winter, we are at the top of the circuit and we head downhill – fast. Within three years we will see reserve margin of generation fall from around 14% to below 5%. That is uncomfortably tight.”

Responding to Alistair Buchanan’s comments on the future of the UK energy market, Angela Knight CBE, chief executive of Energy UK, said: “The regulator is highlighting an area of very real concern. On days like today around 40% of electricity is being produced by coal fired power stations that are being phased out.

“It is essential that the authorities pay close attention to the transition such as assessing what capacity is needed and what headroom is required, and creating a mechanism that allows for steady phasing out of old plant as new technology comes on stream to maximise stability and give confidence to customers and to generators.

They then need to get on with exploring the options for UK shale gas reserves to help energy security and focus on the affordability of energy to households and the competitiveness of British industry.”

This winter, the average household energy bill saw prices hikes as nearly all energy providers increased their prices. Some consumers saw a 10.7% increase to their bill.

According to uSwitch.com, households have seen a 159% increase to their energy bills since 2004.