Energy companies "deliberately inflated" the price they paid for electricity from their own power stations, leaving customers out of pocket by up to £150 over the last three years, Labour has claimed.
The so-called Big Six, British Gas, SSE, E.ON, EDF, npower, and Scottish Power, paid £4bn more for power than market rate, according to shadow energy secretary Caroline Flint.
She accused the companies of paying over the odds to increase profits in other divisions of their companies or doing deals that were bad for customers.
Ms Flint told the Guardian: " These figures reveal the full extent of the way consumers have been overcharged for their electricity.
"Energy companies always blame wholesale costs when they put up bills, but it now looks like they could have deliberately inflated prices to boost profits from their power stations.
"The time has come for a complete overhaul of our energy market. Labour will break up the big energy companies, put an end to the secret deals and force them to do all of their trading on the open market."
Labour's analysis compared the price paid for electricity by the energy giants, the weighted average cost of fuel, with the average market price a year ahead provided to them by small supplier First Utility.
But Energy UK, which represents the big six suppliers, told the Guardian Labour's research was wrong because the figures could not be compared.
A spokesman said: " It also covers losses, the energy element of reconciliation-by-difference (RBD) costs and balancing and shaping costs incurred by the supply. The additional costs included in the weighted average cost of fuel make them a totally different figure to the basic wholesale market price," a spokesman said.
"It is also worth pointing out that there isn't a single 'wholesale' price. Different companies buy at different times, from different people, for different prices depending on demand, forecasts and a whole host of other factors. These different business practices mean that each energy company will be paying a different amount for its wholesale energy."
It comes as Energy Secretary Ed Davey called for Britain to be part of a fully integrated European power market to bring bills down.
The Liberal Democrat dismissed Labour's plans for a price freeze and insisted a giant network of underground and under-sea cables allowing energy to be shifted between the UK and mainland Europe would push down prices.
He said there was an urgent need to build a giant network of electricity interconnectors across Europe, allowing vast amounts of energy to be moved between countries, driving down prices - shaving a possible 10% off bills.
Mr Davey told The Independent: "Literally in the last three or four years, there has been a complete change in the differential between the North American price for gas and energy and the EU price for gas and energy," he said. "That represents a strategic change in the terms of trade and is very significant. The EU needs to respond to this very quickly."
Although there are some gas interconnectors already linking countries within Europe and electricity interconnectors between the UK and France, the Netherlands and Ireland, Mr Davey called for swift action to boost the system to ensure Britain can compete with the United States, where energy prices are far lower.
"We need much better grid interconnectors around Europe to enable energy to flow across the EU. Connecting the UK with mainland Europe and different parts of the periphery of Europe with central Europe. We need Eastern and Central Europe to be better connected with Germany and France and we need the Iberian peninsula to be better connected through France," he told the newspaper.