Household energy bills will soar by £693 per year from the beginning of April, energy regulator Ofgem has confirmed.
The regulator was forced to hike the energy price cap to a record £1,971 for a typical household as gas prices soared to unprecedented highs.
For customers with prepayment meters the price cap will go up by £708 to £2,017, the regulator added.
The decision is likely to impact 22 million households across the UK and applies to those who are on their energy supplier’s default tariff.
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.”
The announcement was made shortly before Chancellor Rishi Sunak was set to detail help for households to deal with the massive spike in energy prices.
The Government has for weeks been assessing what it can do to help customers. Potential solutions have included loans to energy companies and cuts in VAT or levies on energy bills.
However, as late as Wednesday night, some of Britain’s biggest energy suppliers had not been told what the Chancellor would announce.
Ofgem also plans to, on Friday, set out new rules which will allow it to change the energy price cap in between its regular six-month reviews.
The regulator pledged the power will only be used in exceptional circumstances, and five tests will have to be passed before it can step in.
The price cap had already been set at a record high in October before the worst of the gas price spike had been seen in the market.
The latest rise had been largely expected by experts and companies, although the details were still to be confirmed.
Cornwall Insight, an analysis outfit, said on Wednesday that it thought the price cap would be £1,915 per household.
There are also worries about next winter, when experts predict bills could spike to as much as £2,329.
The price cap change was originally planned to be announced next Monday, but in a surprise move Ofgem moved it forward without explaining why.
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