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Britain's energy regulator should set gas network operators more challenging efficiency targets, MPs have said.

The House of Commons public accounts committee (PAC) made its recommendation after hearing evidence from Ofgem over the sale of National Grid's regional gas networks in June 2005.

Four of the utility's eight networks were sold for a combined £5.8 billion to four separate companies, but the committee claims that predicted efficiency savings for consumers are insufficient.

Ofgem says that customers would benefit from the National Grid restructure to the tune of £325 million between 2008 and 2023.

But this amounts to a £1 reduction from average annual energy bills of £550, the committee contends.

PAC is now calling on Ofgem to "set challenging efficiency targets" at its next price review in 2008, with savings of £830 million overall possible.

Committee chairman Edward Leigh today said: "Approving the sales of four of the regional gas distribution networks on the basis that consumers would be no worse off was far too cautious a stance.

"Ofgem must be bold in setting price controls at the next review in 2008, negotiating on the assumption that efficiency savings of at least three per cent per annum can be achieved. And the regulator must make sure that the regulations it imposes on the gas industry genuinely encourage innovative and efficient behaviour and that lower gas distribution costs really do result in lower gas bills," he added.