Gas and electricity giant Npower could be sold for up to £5bn after its German parent company RWE put its future under review.
RWE has hired investment bankers at Goldman Sachs to consider Npower’s future, according to reports, and the options on the table include putting the company up for auction.
Tim Yeo, the MP and chairman of the Energy and Climate Change Select Committee, said the potential sale is "worrying".
Npower, which supplies energy to 6.8m homes, was bought by RWE in 2002 for £3.1bn. The company, which employs 11,000 staff and generates eight per cent of the UK’s electricity, last year made profits of £245m on sales of £7bn.
RWE, the second largest power company in Germany, is understood to be mulling a sale because it wants to pay down some of its large debt mountain.
If the UK fails to attract enough investment then it will be difficult to reduce emissions to committed levels and could even lead to the country struggling to produce enough electricity to meet growing demand, the Conservative MP said.
"We may find we just don't have enough generator capacity in this country," he added.
Phillip Lee, another member of the committee, warned a sale could worsen consumer choice of electricity and gas providers. Energy providers are already under pressure following price rises this year.