ScottishPower is set to offer customers ‘energy bundles’ of gas and electricity as opposed to signing up to standard or fixed-price deals.
The bundle system is being based on the way people fill up their car with petrol or buy data bundles with a mobile phone and aims to simplify energy bills.
Customers will be able to use an app that measures consumption and allows them to buy packages of gas and electricity based on a personalised forecast of how much they are likely to use.
ScottishPower chief executive Keith Anderson said: "We're saying to people buy it by the day, not by kilowatts or a fancy tariff you don't understand. You go to the garage and put £50 in your car. Inherently you know that will last you two to three weeks. We thought why don't we do the same thing with energy."
The PowerUp scheme also means customers will not have to pay a standing charge, with tariffs expected to include some of the firm’s most competitive prices.
The news comes after two-year investigation into the energy industry by the competition authority highlighted that energy markets were not competitive enough.
In a statement, Ofgem said: "We want more competition to increase choice and drive down prices for consumers.
"We encourage suppliers to offer new innovative tariffs to help people engage in the market and find the best deal which suits them.
"Innovative tariffs can be tailored to an individual consumer's needs and give people more control over their energy bill and how they pay for it."