Millions of households will see their energy bills hiked by almost £700 from this April, regulator Ofgem has confirmed.
Those on default tariffs paying by direct debit will see an increase of £693 from £1,277 to £1,971 from April 1 - an eye-watering rise of around 54%.
Prepayment customers will be worst hit, with an increase of £708 from £1,309 to £2,017.
The move will affect some 22 million households and follows a 12% rise in October.
It will affect default tariff customers who haven’t switched to a fixed deal and those who remain with their new supplier after their previous supplier exited the market.
An announcement on the energy price cap had been due next week but was brought forward to today.
The price cap sets a limit on the rates a supplier can charge for each unit of gas and electricity you use and is reviewed twice a year.
The reason for the climbing price of energy is a squeeze on gas prices around the world, caused by the Covid pandemic.
Businesses being shut down led to low global energy consumption, which then followed by a rapid bounceback as the economy began to open up again.
Soaring prices of wholesale gas - which have quadrupled in the last year - mean suppliers are passing on the cost on to customers.
Since the beginning of 2021, around 30 energy companies have also gone bust under the weight of the crisis, leaving over two million customers moved over to another provider.
We've got a full list of all the energy firms that have gone under here.
Ofgem chief executive Jonathan Brearley said: "We know this rise will be extremely worrying for many people, especially those who are struggling to make ends meet, and Ofgem will ensure energy companies support their customers in any way they can.
"The energy market has faced a huge challenge due to the unprecedented increase in global gas prices - a once in a 30-year event - and Ofgem's role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying electricity and gas.
"Ofgem is working to stabilise the market and over the longer term to diversify our sources of energy which will help protect customers from similar price shocks in the future."
The announcement was made shortly before Chancellor Rishi Sunak confirmed help worth £350 from the government to help toward the cost of living crisis.
The Chancellor told MPs that eligible people would get a £150 discount on their council tax in April and a £200 rebate in October off their bills.
The £200 help with bills will be met in full by the government - but will be repaid by customers in equal £40 instalments from April 2023, when it's hoped prices will have dropped.
The council tax rebate won't need to be repaid and will be for households in Bands A to D.
Boris Johnson’s spokesman said the government “fully appreciate people will be concerned about the cost of living.”
He added: “The Chancellor’s going to Parliament shortly to set out further help for households.
“It will build upon the £12billion of support we already have in place this financial year to ease the cost of living pressures.”
