It has heated our homes, powered our industries and supported our balance of payments.

But now we are entering a new era for energy as North Sea reserves start to decline and the UK becomes reliant on imported gas.

I think the decline was sharper than many inside the industry expected.

This, coupled with continuing high oil prices, is pushing up the cost of gas to record levels.

As several energy suppliers have warned, customers face the prospect of rising bills. Heavy industry has said that it may have to stop production this winter.

Many people will rightly be asking why prices have risen so much. While part of the answer lies in simple supply and demand economics, the makeup of today's gas price is a great deal more complex.

There is likely to be enough gas this winter and consumers need not be concerned about the lights going out. But with North Sea reserves declining we do need to take action.

There is already considerable investment being made in building pipelines from Norway and the Netherlands to the UK and terminals to ship liquefied natural gas from Africa and the Middle East.

British Gas has already committed to overseas gas purchase contracts worth more than Pounds 12bn. These underpin the investment needed to build pipelines and develop LNG terminals.

But the other part of the story is that Britain is no longer an energy island and is therefore vulnerable to inefficiencies in European markets.

The continued reluctance of some EU member states to open up their energy markets is to the detriment of UK businesses and consumers.

Not only does the UK face great difficulty in buying gas on the Continent, but transporting it here in the quantities we need is an even tougher problem.

Most major gas pipelines and storage facilities on the Continent are owned by monopolies which benefit from maintaining the status quo.

Some of these are the very same companies which supply more than 20 million UK business and domestic accounts.

The uncertainty over the availability of gas also appears to have added an 'anxiety premium' to UK gas prices for next winter.

So what should be done?

The EU has a clear timetable for liberalising energy markets, including household competition, by 2007.

This should lead to the establishment of a proper traded market, as has happened in the UK, and companies gaining access to networks in order to transport gas.

But the track record of many member states is poor the European Commission has just referred five countries to the European Court of Justice for not implementing the 2003 energy directives.

Crucially, the EU Commission has launched a wide-ranging inquiry into EU energy markets, looking for evidence of anticompetitive practices.

That is a good first step and we are encouraged by the new Energy and Competition Commissioners' stated determination to deliver.

CENTRICA'S submission will be forthright, arguing for fair and equal access for all companies to the monopoly energy infrastructures across Europe.

This would allow easier access to pipelines for companies that either wish to compete with incumbent suppliers or which need to transport gas to where it is needed most.

The issues are pressing, so we have called on the Commission to act immediately when it uncovers anti-competitive practices, and not wait until its report is published next year.

The UK government has a golden opportunity through the presidency of the EU to elevate energy liberalisation up the political agenda.

Britain has led the way in changing how energy markets worked as we embraced competition and consumers benefited from falling prices. Now is the time to tackle the closed shop of Continental energy markets.

Failure to do so will mean UK consumers and businesses pay the price through higher energy bills.

Sir Roy Gardner is chief executive of Centrica.