An analysis released by the Local Government Association suggested that the power giants are more than 60% behind their target to deliver more energy-efficient homes.
This is despite raising almost £1 billion so far this year through the Energy Company Obligation (ECO) levy, which adds around £50 to the average household's annual bill.
The ECO is designed to raise money to deliver warmer homes for people on limited incomes and lower their utility bills by reducing the amount of energy they need to use.
But the LGA warned that tens of thousands of eligible households will face another winter of high bills and cold homes because of the failure to deliver insulation improvements in time.
The organisation, which represents 373 councils in England and Wales, urged the companies to work with local authorities to get the work done.
The chairman of the LGA's environment and housing board, Mike Jones, said: " Energy companies are collecting this money through a levy which is contributing to the cost of fuel bills and they have an obligation to invest it as swiftly and effectively as possible to deliver upgrades which save vulnerable people money and keep them warm and healthy this winter.
A spokesman for the energy industry's trade association Energy UK said: "No-one should be cold this winter. If people are worried they should contact their energy company - they may have schemes to help and can offer advice.
"Energy UK has been working with local authorities on the delivery of the ECO and the Green Deal. We have already held a number of roadshows round the country where participants - including local authorities, housing associations, providers, DECC and the Green Investment Bank - have been able to share their experiences and learn for best practice.
"We appreciate that ECO, like any major new Government programme, takes time to bed in and for people to understand how things work, but the industry is committed to helping in that process."
© 2013 Press Association