Gas and electric bills will rocket this year after the energy regulator raised the price cap to almost £2000 a year.

Ofgem has increased the cap on bills by £693 to £1971 a year starting in April.

It will mean an increase of as much as 54% a month for some households.

The cap is on per unit of energy meaning the monthly cap on bills will now be an average of £164 for those on default tarrifs.

Consumer experts said it is an "eye watering increase" and will force people into poverty and destitution.

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The rising cost of wholesale gas means energy companies have been selling to homes for less than they pay for it on the international market. 

Several firms went bust as a result, leaving only the big players left in buisness.

Jonathan Brearley, Ofgem chief executive, 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."

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Rishi Sunak, the Chancellor is due to make ana announcement later today on help for households to cope with rising bills.

He could give loans to energy companies or cut the 5% VAT rate on energy bills.

Derek Mitchell, Citizens Advice Scotland, Chief Executive, said: “This eye-watering increase is a hammer blow for consumers. One in three of us already find bills unaffordable and shamefully almost half a million people in Scotland have had to cut back on food to deal with unaffordable bills.

“This simply isn’t a sustainable position for people. April will be a nightmare scenario as rising bills and prices in the shops collide with flat or falling incomes, creating a perfect storm that could sweep millions of people across the UK into poverty, debt and destitution. No one should be forced into the heart breaking choice between keeping their homes warm or feeding their families.

“We need immediate direct interventions. To be clear we are looking for the UK Government to intervene to limit the detriment that these unprecedented bill increases will cause. We also need a long-term plan to keep bills down.”

Consumer experts said the hike will be devastating and any measures the Chancellor announces will not be enough to protect people.

Justina Miltienyte, energy policy expert at energy website Uswitch.com said: “The severity of the energy crisis is now becoming a reality for 22 million households. This is the toughest energy price hike in recent memory and brutally comes at a time when other essential bills are rising. 

"While the Government will try to soften the impact of this rise, there’s no getting away from the fact that this is going to have damaging consequences for households. 

“The expected measures will only be sticking plasters on a long term problem, and it’s consumers who will ultimately be paying the price.

“This situation is even worse for those in fuel poverty, who are already trapped in a vicious cycle of energy debt. It calls into sharp focus just how vital the Government support for the most vulnerable households is.”