Around 15 million households are set to see their energy bills rise from the start of April.
Customers on both default and prepayment tariffs will be affected by the rise.
Ofgem said it would increase the amount that suppliers are allowed to charge by £96 to £1,138 for default customers and £87 to £1,156 for prepayment customers from April 1.
The regulator sets the level of the cap, and said that it would return to pre-pandemic levels, largely as a result of changes to the amount of money suppliers have to pay to source energy.
Jonathan Brearley, chief executive of Ofgem, said: " Energy bill increases are never welcome, especially as many households are struggling with the impact of the pandemic.
"We have carefully scrutinised these changes to ensure that customers only pay a fair price for their energy.
"The price cap offers a safety net against poor pricing practices, saving customers up to £100 a year, but if they want to avoid the increase in April they should shop around for a cheaper deal.
"As the UK still faces challenges around Covid-19, during this exceptional time I expect suppliers to set their prices competitively, treat all customers fairly and ensure that any household in financial distress is given access to the support they need."
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Money Saving Expert Martin Lewis warned customers about the rise on his ITV show on Thursday night.
He said that customers could expect their bills to rise by around £70-£90.
The new cap will come in on April 1 and will last for six months when it will be reviewed again, with customers potentially seeing another rise.
