SSE has become the first of the big six energy firms to raise prices ahead of winter, with the announcement of an average rise in gas and electricity prices of 8.25% from 15 November.
It means around 7.3 million SSE customers will face further pressure on their household finances this Christmas, with the rise adding £2 a week or £104 a year for those on the average dual fuel tariff.
The firm said it was raising prices due to the cost of buying wholesale energy, paying to deliver it to customers' homes and government-imposed levies collected through energy bills.
Will Morris, group managing director, retail, apologised: "We're sorry we have to do this. We've done as much as we could to keep prices down, but the reality is that buying wholesale energy in global markets, delivering it to customers' homes, and government-imposed levies collected through bills – endorsed by all the major parties – all cost more than they did last year.
"85% of a typical energy bill is made up of costs outside our direct control and these costs have increased. So far this year we have made a loss from supplying energy as a result of the higher costs we have been facing and continue to face."
The news was greeted bitterly by consumer groups, who warned of an increase in fuel poverty this winter. Which? executive director Richard Lloyd said: "This inflation-busting price rise will be a massive blow to SSE customers at a time when rising energy prices are consistently one of the top worries for hard-pressed consumers.
"Current plans to reform the energy market simply don't go far enough. We want the government to intervene to make sure everything possible is done to keep prices in check. We need simpler pricing, we need to break the stranglehold of the biggest energy companies by separating domestic supply from generation and the government must make sure that its own policies are not adding unnecessary costs to consumers' bills. "
The rise comes soon after Labour leader Ed Miliband said his party would force energy firms to freeze energy bills until 2017 – a proposal that was widely attacked by the Tory government and the energy groups themselves.
Edward Davey MP, energy and climate change secretary, said: "This is clearly unwelcome news for customers of SSE. People should take the opportunity now to make sure they are on the best deal available to them."
He argued that wholesale energy costs were far greater than any costs resulting from government policy, but SSE's Morris argued: "[The government] can't expect to have power stations replaced with new technologies, the network to be upgraded and nationwide energy efficiency schemes all to be funded for free.
"If politicians want to do something to make bills cheaper and fairer, they should take the cost of government policies out of bills and fund them through general taxation instead."
Jeremy Cryer, energy spokesperson at Gocompare.com, said: "If people want to ensure that they don't spend more than they need to on the energy they use this winter, they should shop around now to find the best tariff for their region and energy consumption. And if you're concerned about the rising cost of gas and electricity and would like to have some control over how much you spend for a longer period, consider switching to a fixed deal."