Soaring gas prices have forced some of the UK’s leading power stations to reduce output as the nation braces itself for the coldest winter in a decade.

Wholesale gas prices have tripled in the last week as freezing weather brought by Arctic winds has boosted demand and reignited worries about supply problems this winter.

"Gas generators and industrial users are reacting very rapidly to the market situation," John Shead, the director of Total’s UK energy retail business, told a conference today. "Demand is running at about 80 per cent of what we expect it to be in the light of the temperatures in the last ten days," he added.

Mr Shead said businesses were cutting production because many were exposed to prices in the spot market that have soared, instead of relying on less volatile annual contacts.

The news comes as the Prime Minister, Tony Blair, gave evidence to MPs in favour of building a series of nuclear reactors to deal with the UK’s looming energy shortfalls.

The Government has said that it has yet to make a final decision on the nuclear question and commissioned three separate reports to investigate the options

But Andris Piebalgs, the EU’s energy commissioner, today urged the British Government to make a final decision sooner rather than later because it would ease pressure on energy prices. "I think it is a very important message for the market," he told BBC Radio 4’s The World at One.

Mr Piebalgs' intervention follows two EU reports released last week that stated there were "serious malfunctions" in the wholesale gas market.

Since becoming a net importer of gas last year, the UK relies on fuel via a pipeline from Belgium or liquefied natural gas (LNG) being brought in by tanker.

But wholesale gas in Germany is currently one-third of the price in the UK, leading suppliers such as British Gas to claim that the UK consumer is getting a raw deal.

"There is a need for a much more independent and separate transmission system on the Continent, so that supply and demand are much more closely aligned and wholesale prices in the UK are more realistic," the company said.

Experts warned that increases in wholesale gas price rises were sure to be passed on to consumers, which could send utility bills soaring in the new year.

Simplyswitch.com, a comparison service, is predicting that gas bills will rise by 13.7 per cent from January. The cost of electricity is also linked to gas prices, so those bills are likely to climb too - by about 12 per cent Simplyswitch estimates. This will cost the average household an extra £85 a year.

A number of utility providers have offers that allow consumers to fix the cost of gas and electricity but at a higher price than current levels. Uswitch.com, another price comparison service, warned consumers that fixes could prove costly in the long run.

Tim Wolfendon, a spokesman for Uswitch said: "We urge caution about fixing for longer than 2007-2008 as the industry is predicting a downward turn in prices by 2007, so anyone fixing for longer than this may end up on an artificially high tariff."