Ofgem said the level of its safeguard tariff – which stops suppliers from charging customers too much – will increase from £1,031 to £1,089 for dual fuel customers on average.
That’s mainly due to higher wholesale energy and policy costs to support low carbon forms of electricity generation, the regulator added.
It introduced the safeguard tariff for more than four million prepayment customers in April last year and has now extended it for an extra one million households, who currently receive the Warm Home Discount.
The million households are to initially make savings of around £115 a year on average but from April, that will fall to £66 a year.
However, consumers are still expected to be better off after April than if there was no cap on gas and electricity prices.
According to government statistics, these households will only see an increase of around 3.7% on their bills compared to an average 8% rise of dual fuel standard variable tariffs of the Big Six last year.
Chief Executive Dermot Nolan said: “Even when energy costs rise, people on the worst deals are better off under the safeguard tariff as they can be sure that they are not overpaying for their energy and any rise is justified.
“Ofgem is working with the government to protect all customers on poor value default deals, such as standard variable tariffs, from being charged too much for their energy as soon as possible. Our aim is to protect those who do not switch, while making it easier for those who do get a better deal.”