Ofgem's energy price cap will increase by £693 to £1,971, affecting all those on a standard variable tariff.
The prepayment price cap has also gone up from £1,309 to £2,017, a £708 increase.
This record price cap increase will take effect from 1st April, and will change the price of 22 million customers' energy bills. Any customer who is not on a fixed energy deal will see their energy costs increase.
Commenting on Ofgem’s price cap announcement, Tashema Jackson, energy expert at Energy Helpline says:
“This is a body blow for the millions of households that will see their annual energy bill hit record highs - with the £693 increase taking the average annual energy bill to £1,971."
“Consumers, who have already seen their energy bills at record levels over the past six months, will be hit by this 54% hike alongside a number of other cost of living increases - including tax rises and food inflation."
“With around 22 million of households affected, this is the single biggest bill increase in living memory, and will leave many people up and down the country with the stark choice of heating or eating."
“While the government plans to offer an energy rebate to everyone will help ease the immediate effect of this rise, £200 a year off your energy bill is less than half of the increase most households are set to face, and will still have to be repaid at a later date."
“The next step is to see how suppliers react to this news and if they will start to offer tariffs which allow customers to fix their energy costs at a competitive rate.”
Jonathan Brearley, chief executive of Ofgem, 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.”