The price changes, which take effect from August 21, will add almost 130 pounds to the annual bill of typical customers taking both electricity and gas, Powergen said.
It is the second time this year that Powergen, which is owned by German utility E.ON, has hiked its prices.
Powergen last raised them in March, when gas charges were jacked up by a record 24.4 percent and power bills surged by 18.4 percent.
The company said around 10 percent of its customers who are on capped or fixed price deals would not be affected.
Tight gas supplies, as ageing North Sea fields pump out less and less have helped lift wholesale gas prices to record levels and utilities have upped bills to protect their profits.
A major shutdown at the giant Rough gas storage facility in the North Sea has exacerbated the situation.
UK utilities have to buy gas wholesale for re-selling to households and businesses, whose bills have rocketed over the last two years.
The average annual home energy bill now exceeds 1,000 pounds.
"We take today's announcement very seriously and have fully considered its impact on our customers," Nick Horler, Managing Director of Powergen Retail said in a statement.
British Gas owner Centrica, EDF Energy, Scottish Power, Scottish & Southern and npower have all hiked their gas and power prices twice this year, blaming soaring wholesale costs.
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