Household energy prices will rise by 13% a year in July, as soaring wholesale costs caused by the impact of the Iran war hit bills for the first time.
Regulator Ofgem says the conflict will mean a household using a typical amount of gas and electricity will pay £221 more a year, with an annual bill of £1,862.
The cap affects millions of homes on variable tariffs in England, Scotland and Wales, and suppliers are warning that it could go even higher at home in the colder winter months without a resolution thousands of miles away.
Energy costs have been sent rocketing by Iran's move to block the crucial Strait of Hormuz shipping route, through which a fifth of the world's oil and gas is carried.
The cap fixes the maximum amount customers can be charged for each unit of gas and electricity via variable tariffs, not the total bill.
Ofgem has decided to reduce what it believes to be a "typical" level of energy use, because many households have cut back owing to high prices of recent years, and energy efficiency has improved.
