The average energy bill for households in Great Britain will rise by £111 from April to £1,849 a year for a typical household, after the energy regulator announced the third consecutive increase in the cap on gas and electricity charges.
The 6.4% rise from April largely reflects an increase in wholesale prices, and was bigger than forecasters had expected.
Ofgem last raised the cap in January by 1.2% to a rate equivalent to £1,738 a year for those on direct debits as freezing temperatures across Europe depleted gas stores and drove market prices higher.
Campaigners said an increase in the cap would be “unbearable” for households who have struggled to pay their bills during winter.
The latest price rise means households will be forced to pay about £600 a year more for their gas and electricity than before Russia’s invasion of Ukraine three years ago.
About 9m homes that buy their energy through variable tariffs will see an immediate impact on their bills as the cap takes effect in April, while it will be delayed for others on fixed tariffs.
Households could face even higher bills if they use more than the typical amount of energy. This is because the cap, which is recalculated every three months, limits the rate energy suppliers can charge customers for each unit of gas and electricity – not the total bill.
From April, the cap on electricity prices will rise from 25p a kilowatt hour to 27p, with a standing charge of 61p easing to 54p. Gas will increase from 6.34p a kilowatt hour to 6.99p, with a standing charge of 31.65p nudging up to 32.67p.
Analysts at the energy consultancy Cornwall Insight had predicted in January that the April cap would rise to £1,785 a year, but an increase in energy market prices since pushed the figure higher. Last week, the consultancy predicted the cap would rise by £85, or 5%, from April to £1,823.
The cap affects about 22 million customers on standard variable tariffs, while 11 million people were on a fixed deal and would not be affected by the change in the price cap, Ofgem said.
Jonathan Brearley, the Ofgem chief executive, 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.”
The higher than expected price cap, which is updated every quarter, comes as a blow to the government’s election promise to bring down energy bills by “up to £300 by 2030”.
On Tuesday, the government said it consulting on the expansion of the warm home discountless than a year after Rachel Reeves said about 10 million pensioners in England and Wales would lose the payment, which gives eligible households £150 off their winter energy bills.
The plan to expand the scheme would bring another 2.7 million households, including almost a million families with children, into the scheme, pushing the total number of households that would receive the discount next winter up to 6.1 million, or one in five families in Britain.
The energy secretary, Ed Miliband, said: “This government is determined to do everything we can to protect people from the grip of fossil fuel markets.”
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The price cap is expected to fall slightly in the summer, according to Cornwall Insight, before rising again in October when colder weather is likely to drive household energy use higher.
Peter Smith, the policy director at the fuel poverty charity National Energy Action (NEA), said that although the price increase would take effect during spring as temperatures rose this would be “cold comfort” for many who had struggled to pay their energy bills during the winter.
“The thought of a third successive and significant price cap rise will be unbearable for many of the people we try and help. This winter has been brutal, people’s bills are already totally unaffordable, many have had less access to support and are already in unmanageable amounts of energy debt,” he added.
Dame Clare Moriarty, the chief executive of Citizens Advice, said: “We’re particularly concerned about households with children, where more than one in three struggle to afford bills, rising to more than half of those on low incomes.”
Craig Lowrey, a principal consultant at Cornwall Insight, said: “Households have been promised falls in bills, and many will be understandably irritated with what they may see as a failure of government energy policy.
“However, the reality is, our gas-led wholesale power market and reliance on international imports limits the impact of what any government policy can have – at least in the short term – there is only so much you can do when prices are rising across the world.”
The government will also work with Ofgem to speed up proposals to tackle unsustainable debt run up by families during the energy crisis, with the aim of lower costs by £25-£30 a year.
Brearley said: “We’re developing plans that could give households with unmanageable debt the clean slate they need to move forward.”
