Phoenix Gas is to lose its monopoly of supply in the greater Belfast and Larne areas under government plans to open Northern Ireland's gas market.
The gas market is to be opened up to competition
Energy Minister Angela Smith said the government was opening up the region to competition following a public consultation exercise.
The move follows criticism of Phoenix Natural Gas for increasing its prices by 52% within four months.
The announcement has been welcomed by the Consumer Council.
It said competition meant "people should soon be able to shop around for the deal that suits them".
Phoenix is the sole domestic gas supplier in Belfast while Firmus Energy was recently licensed to supply gas to customers in 10 towns outside Belfast.
Angela Smith said that while it had been important that Phoenix had an exclusive licence initially, competition was now vital "to strengthen and develop" the gas market.
"Competition is good for Northern Ireland consumers," she said.
"It provides choice, better customer service and, based on experience elsewhere, it can lower costs, something my department is committed to."
Wesley Henderson, Consumer Council director of energy, said the minister's announcement "could not have come at a better time".
"Rising energy prices are top of the news at the minute and consumers are really worried about spiralling costs," he said.
"Today's announcement by Angela Smith paves the way for consumer choice and companies actively competing for gas customers."