Ofgem has confirmed that the energy price cap will rise by 6.4 per cent on April 1, from £1,738 to £1,849 for the average household in England, Wales and Scotland.
This comes as a cost of living blow to millions of families as analysts had previously estimated the price cap to increase by around five per cent with energy bills now expected to be more expensive.
Last week, Cornwall Insights projected the typical annual household energy bill will rise by about £85 to £1,823 but Ofgem's announcement came in noticeably higher.
This hike is primarily due to an increase in gas prices across Europe, resulting from a drop in the amount of gas that is held in storage across the continent.
Thanks to the energy price cap, a maximum price that energy firm can charge people in England, Scotland and Wales is set for each unit of gas and electricity they use.
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Ofgem's energy price cap has risen higher than expectedGETTY Poverty campaigners are warning that the average home will pay £750 more annually for their energy compared to winter 2020/21, representing a 77 per cent per cent increase.
The cost of every unit of gas used will surge by over 10 per cent, meaning the cost of gas is now double what it was in winter 2020/21.
Furthermore, families should expect the price for every unit of electricity to go up almost nine per cent from April 1.
According to the End Fuel Poverty Coalition, around 40 per cent of the time the cost of electricity is also driven by the price of gas due to the country’s energy system.
Household energy bills will jump by £21 as a result of Ofgem's energy price cap riseGETTY Jonathan Brearley, the CEO of Ofgem, said: "We know that no price rise is ever welcome, and that the cost of energy remains a huge challenge for many households."
“But our reliance on international gas markets leads to volatile wholesale prices, and continues to drive up bills, which is why it’s more important than ever that we’re driving forward investment in a cleaner, homegrown system.
"Energy debts that began during the energy crisis have reached record levels and without intervention will continue to grow.
"This puts families under huge stress and increases costs for all customers. We’re developing plans that could give households with unmanageable debt the clean slate they need to move forward."
Following today's figures, Energy Secretary Ed Miliband said: "This Government is determined to do everything we can to protect people from the grip of fossil fuel markets.
"Expanding the Warm Home Discount can help protect millions of families from rising energy bills, offering support to consumers across the country.
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Ed Miliband is under scrutiny over the price cap rise
Getty Images"This is a Government that will always stand up for working people.
“Alongside this, the way to deliver energy security and bring down bills for good is to deliver our mission to make Britain a clean energy superpower- with homegrown clean power that we in Britain control."
Gareth Kloet, a spokesperson for Go,Compare energy, added: "The latest rise in the energy price cap is undoubtedly going to create more pressure on household finances across the country, with many families already feeling the strain
"Many may be wondering why the decision has been taken to increase the price cap. Importantly, the energy price cap is a reflection of what it costs suppliers to provide our homes with energy, so if costs to the UK market rise, this is likely to be reflected in the price cap."
