The European Commission today took action against 17 of its member states including Britain as part of a major crackdown designed to open Europe's energy sector to competition and lower prices for consumers.

Analysts say the move could help save British consumers £10 billion year in inflated energy bills.

The EC has sent 28 letters of formal notice to 17 states, including the UK, for failing to adopt measures designed to open up markets and give consumers "a real possibility of changing supplier".

Member states agreed in 2003 to allow outside companies to start providing gas and electricity, but many failed to act. Formal notice marks the first step in a legal process that could lead to heavy fines being imposed on countries.

"The member states must implement the directives on gas and electricity quickly and in full, not only in form but also in substance," Andris Pielbalgs, the EU Energy Commissioner, said.

"The Commission has decided to launch a large number of infringement procedures against member states which have not applied these rules or other measures which are essential to achieve a high level of growth and competitiveness in Europe."

The EC has also taken Spain and Luxembourg to the European Court of Justice for failing to inform the EC on how they plan to adopt European measures. The court has the power to impose fines.

Portugal and Hungary are also being investigated.

Consumer groups had earlier welcomed the prospect of legal action. However they said Brussels could not completely shift the blame for soaring prices away from British utilities.

Centrica, which owns British Gas, Britain’s largest gas supplier, has hiked prices four times in the past two years, while announcing rising profits.

According to the company, Britons will pay an extra £10 billion – equivalent to £186 per household – for energy this year because Europe’s markets have failing to liberalise.

British utilities have claimed that European companies operate a closed market, underpinned by long-term contracts that mean Britain has been undersupplied with gas this winter, despite offering competitive rates.

Times Recommends

• Equitable Life halts £7bn sale on market turmoil
• Potential buyers emerge to save Woolworths staff
• Terrorist attacks close Bombay Stock Exchange