The price hike will take effect from 1 December and equates to an extra £137 per year for dual fuel customers.
The energy firm’s increase is the steepest so far, following British Gas-owner Centrica’s 9.2 per cent rise last week and SSE’s 8.2 per cent increase to the average bill.
Like its peers, Npower attributed the price increase to government policies, higher wholesale energy costs and network charges.
The company estimated that costs from the Energy Companies Obligation – a contentious energy-efficiency scheme that gets energy firms to foot the cost of insulating poorer customers’ homes – would hit £1.9bn.
Energy prices have been in the spotlight following Labour leader Ed Miliband’s pledge last month to freeze bills until 2017 if elected.
“We understand that although the Labour Party’s proposed price freeze may appear superficially attractive it will not lead to lower sustainable prices going forward because it doesn’t cut the growing costs of supplying energy,” said Paul Massara, chief executive of Npower’s parent firm, RWE npower.
EDF Energy’s chief executive Vincent de Rivaz yesterday refused to confirm whether the firm would be raising its prices but said that bills would remain “at the lowest possible level”.
Meanwhile a 1.5 per cent stake in Scottish and Southern Energy (SSE) went up for sale last night.
The 15m shares were placed after the market closed by bookrunner UBS with a guide price of £14.05.
That represents a discount of 3.2 per cent relative to the closing price of £14.52 and values the stake at £210.75m. The investment bank did not disclose the seller’s details.