Around 15 million families will see their energy bills soar by up to £139 after the regulator hiked the price cap by the biggest increase yet.
The sharp rise, which will impact half the population, is driven by a rise of more than 50% in wholesale fuel costs over the last six months with gas prices hitting a record high as the world emerges from lockdown, according to Ofgem.
From October, default tariff customers paying by direct debit will see an increase of £139 from £1,138 to £1277, while those on prepayment meters will see a rise of £153 from £1,156 to £1309.
Surging global fuel prices are already driving up inflation for consumers, making fixed rate energy tariffs, which are usually better value but not covered by the price cap, more expensive.
Even ahead of the rise, Ofgem had moved to alert householders still reeling from the impact of the coronavirus pandemic.
Charities have also warned the increase “could not be coming at a worse time”.
Ofgem chief executive Jonathan Brearley said: “Higher energy bills are never welcome and the timing and size of this increase will be particularly difficult for many families still struggling with the impact of the pandemic.
“The price cap means suppliers only pass on legitimate costs of supplying energy and cannot charge more than the level of the price cap, although they can charge less.
“If you’re struggling to pay your bill you can get in touch with your supplier to access the help that’s available and if possible, shop around for a better deal.
“We have put tough rules in place to ensure suppliers treat customers who are struggling with bills fairly, and welcome their commitment to reach out to those who most need help this winter. Where help is not forthcoming, we will not hesitate to act.
“I appreciate this is extremely difficult news for many people, my commitment to customers is that Ofgem will continue to do everything we can to ensure they are protected this winter, especially those in vulnerable circumstances.”
Ofgem reviews and changes the price cap once every six months.
Energy suppliers are required to price below the limit, with most setting prices just a couple of pounds under.
The increase comes as energy deals have reached the highest cost for more than two years, according to data from Compare the Market.
The average price for one of the cheapest deals on the market is currently £996, the highest charge seen since February 2019.