Energy bills are set to rise by two per cent this winter - double the rate expected - in a blow for millions of Britons.
Regulator Ofgem has increased the energy price cap even further to £1,755 - a hike of £35 from the current level.
The price cap set by Ofgem regulates the maximum amount which can be charged per unit of gas and electricity.
It affects around 21 million households in England, Scotland and Wales.
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The price cap set by Ofgem regulates the maximum amount which can be charged per unit of gas and electricity
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The cap - which analysts predicted to rise by one per cent - was set at 7am on Wednesday and will come into effect at the start of October. It will last for three months, before Ofgem changes it again - based largely on the cost of energy at wholesale markets.
Analysts from energy consultancy Cornwall Insight forecast the average household energy bill would increase by £17 to a total of £1,737 per year when the new cap comes into effect.
Minister for Energy Michael Shanks said: "We know that any price rise is a concern for families. Wholesale gas prices remain 75% above their levels before Russia invaded Ukraine. That is the fossil fuel penalty being paid by families, businesses, and our economy.
"That is why the only answer for Britain is this government’s mission to get us off the rollercoaster of fossil fuel prices and onto clean, homegrown power we control, to bring down bills for good.
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People on means-tested benefits are set to automatically received the £150 Warm Home Discount
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"At the same time, we are determined to take urgent action to support vulnerable families this winter. That includes expanding the £150 Warm Home Discount to 2.7 million more households and stepping up our overhaul of the energy system to increase protections for customers."
Cornwall Insight explained that the change reflects new assumptions about Ofgem’s upcoming price cap.
These include the expansion of the Warm Home Discount scheme, which will add about £15 to the average annual bill. At the same time, the scheme will give an extra 2.7 million vulnerable households £150 in support.
People on means-tested benefits are set to automatically receive the £150 Warm Home Discount. The number of recipients has increased as previous qualifications over property size have been scrapped.
This is on top of the Government's U-turn on Winter Fuel Payments. Campaigners have warned that many households continue to have difficult when it comes to paying their bills, especially as many are paying off debt which had built up through recent periods of high prices.
Simon Francis, coordinator of the End Fuel Poverty Coalition, commented: "Hidden in the detail of the announcement is a 14% increase in gas standing charges while gas unit rates remain almost double pre-crisis levels. And the cost of electricity is also up, which is itself set by the cost of the most expensive generator, usually gas-fired power stations.
“Given that wind and solar are far cheaper ways of generating power and North Sea gas reserves are unable to meet domestic heating needs from 2027, it’s time for action.
“We need urgent reforms to fix the broken pricing system, steps to ensure households benefit from targeted support for cold homes, a nationwide insulation and ventilation drive, reform of energy trading rules and lower standing charges."
Coordinator of the End Fuel Poverty Coalition, Simon Francis, said: "The average family are still paying hundreds of pounds more than they did just a few years ago."
A Department for Energy Security and Net Zero spokeswoman said: "The only way to bring down energy bills for good is with the Government's clean energy superpower mission, which will get the UK off the rollercoaster of fossil fuel prices and on to clean, homegrown power that we control.
"We are taking urgent action to support families this winter - in addition to expanding the £150 Warm Home Discount to 2.7 million more households, we are strengthening customer protections, including by giving people quicker and easier access to automatic compensation when their suppliers let them down."
Campaigners have argued that many households continue to have difficult when it comes to paying their bills
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Last week, Dr Craig Lowrey, principal consultant at Cornwall Insight, said: "News of higher bills will not be welcomed by households, especially as winter approaches.
"While the added costs behind this forecasted rise are aimed at supporting those most in need, it does mean typical bills will increase despite relatively lower wholesale costs. It’s a reminder that the price cap reflects more than just the market price of energy.
"This immediate challenge underscores a broader uncertainty facing millions of households, with current forecasts suggesting a sharp drop in bills is unlikely in the near term.
"Longer term, Ofgem’s review of how Britain’s energy system costs are distributed could reshape the financial burden on consumers, but while some may see savings, others could face higher charges.
"The real hope for lasting relief lies in the longer-term transition towards clean power and energy independence, which offers the greatest prospect of both stability and lower costs."