Transport minister Lord MacDonald announced last week that a consultation paper would be published outlining measures to penalise utilities contractors that cause unnecessary disruption while digging up roads.
Lord MacDonald said the consultation paper will contain two proposals that provide incentives for utilities contractors to work more efficiently.
The first proposal calls for stricter enforcement of existing penalty payments on contractors that go beyond their agreed deadline.
The other proposal, which will require legislation, will force contractors to pay a fee to local authorities when they start work, effectively charging contractors rent for the period they are working on the road.
A similar scheme already exists for contractors involved in motorway maintenance.
Irene Elsom, director of utility contractors trade association the National Joint Utilities Group, said utility contractors would fight the proposals.
Some firms doing this type of work are quite small and rental fees will hit them hard UTILITY CONTRACTOR
She said: "We don't support any of these measures. We have never felt the need to implement these provisions. We have never had any evidence of delays caused by roadworks. If a contractor runs over the time allocated for a project, it's for a very good reason."
A London-based utility contractor said: "All these measures will do is increase the cost of the work, which will ultimately end up being paid by the customer. If people want higher gas, electric and water rates, then the government is on to a winner."
He added: "The government just wants to find another way of raising revenue without raising taxes. But some of the firms doing this type of work are quite small and rental fees will hit them quite hard."
However, David Wheeler, business development manager for McNicholas, which has an annual utilities turnover of about £60m, said: "I can't see any real problems. There is a possibility that it could hurt smaller companies, but most of our competitors are fairly big. Anything that improves efficiency should be welcomed."
A spokesperson for the DETR said: "The proposals are not about raising revenue. They are about minimising inconvenience to people. We accept that utilities have to dig up roads, but if the disruption it causes can be minimised it is in everyone's interest."