The Senate has approved in principle government plans to liberalise the electricity market, giving both industrial consumers and private households the freedom to choose their power suppliers.
Wednesday's debate focused on the pace of opening up the electricity market. Under the proposal, consumers would be able to pick their electricity supplier within six years of the new legislation being passed.
The new law also foresees the establishment of a national network company to ensure that all suppliers have access to the grid.
This would bring Switzerland in line with most industrialised countries.
Switzerland has more than 1,200 electricity utilities. More than 55 per cent of the country's electricity comes from hydroelectric plants, with about 40 per cent generated by nuclear power stations.
The hydroelectric operators stand to lose most if the market is liberalised, and many are demanding compensation.
The Senate voted in favour of financial support for hydroelectric operators to soften the impact. But the idea is opposed both by government and the voters, who last month turned down a proposal to impose a levy on the use of non-renewable energy for a compensation fund.
The Senate's discussions also highlighted the need for swift action to remain competitive on the international markets. But they said measures were needed to ensure that a national network company remains in Swiss hands.
The bill now goes back to the House of Representatives. In March, the house came out in favour of a stage-by-stage liberalisation of the power market, but it voted for a different model to that approved by the Senate.
swissinfo with agencies