Three major changes that may affect your energy bills

Watch: Rishi Sunak announces new measures to help with energy price rise

Millions of consumers are facing record-breaking increases to their energy bills following Ofgem's decision to increase the energy price cap.

The cap, which is designed to protect consumers from being overcharged on their bills, soared by £693 – meaning those on default tariffs will see bills increase on average from £1,277 to £1,971 per year.

Increases in prices have been fuelled by several factors, including lower-than-expected gas supplies from Russia and higher-than-expected demand on the continent.

Read more: Martin Lewis tackles confusion over Rishi Sunak's £200 energy 'loan'

Some 22 million households are on plans linked to the energy price cap, with Ofgem insisting price increases are necessary to prevent more energy companies going bust amid surging prices.

The head of Ofgem was questioned by MPs in parliament on Tuesday, and revealed that more changes to bills are likely.

These are the major changes that could impact your bill.

Prices could rise again this year

Analysts predict the energy price cap is likely to rise again when it is reviewed later this year, pushing up bills even further.

Energy consultants Cornwall Insight forecast a rise to £2,329 this winter, which would deal a further devastating blow to millions of low income households already struggling with the cost-of-living crisis.

Jonathan Brearley, chief executive of Ofgem, acknowledged that another rise was likely, but urged caution in making predictions.

He told MPs: "When you look at the forward prices right now, there is a pressure in prices still, so you may see a rise in October.

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"But the caution I have in sort of predicting that, is I went back and looked at what we predicted in August – when we announced this price cap – and the difference between those predictions, which were the price cap have stayed roughly level, versus what we've seen, are huge."

Last week, money-saving expert and consumer champion Martin Lewis told Yahoo News UK that he feared energy prices could continue to rise in the autumn.

"The worst thing is that if wholesale rates stay where they currently are right now, that won't be the end of it," he said. 'We expect to see the first October's price cap to rise again by 20%."

More frequent changes to the energy price cap

The energy price cap is adjusted every six months in line with seasonal changes, but there are growing calls to increase the frequency of the reviews.

However, the changes are controversial – with some arguing consumers could end up paying more if energy costs are rising, and others that it provides a much more accurate cap for bills and protects customers from sudden spikes.

"I think when you look at the history of the price cap – not a very long history – but the history of the price cap, in a fairly stable market these things have really been edge issues compared to the changes that we've seen, Brearley said. "But in a volatile market, that's absolutely the issue we've seen with the price cap design.

Watch: How can you try to keep energy bills down?

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"And that's why we're saying our front row option for change for October will be to change every three months so those changes are constant.

"I should say that consumer groups, I think, net accept the proposal that we're suggesting... but there's a degree of discomfort with that because it does leave people with a more volatile pricing situation – so there are big trade-offs."

The Department for Business, Energy and Industrial Strategy did not confirm its position on reducing the review period when contacted by Yahoo News UK for comment.

Ukraine crisis

Threats by Russian president Vladimir Putin to invade Ukraine pose significant risks to the European energy markets, which are highly dependent on Russian oil and gas.

Following years of tension, Putin has begun amassing troops on the border with Ukraine citing multiple reasons – including accusing Nato of attempting to extend its influence on the continent by strengthening its ties with Ukraine.

Neil Kenward, director of strategy and decarbonisation at Ofgem, told MPs that potential price rises linked with Russia and Ukraine mean it's "impossible" to say how expensive energy could get.

"If Russia invades Ukraine, and let's say there was a sanctions regime that meant Russia limited gas to Europe, that would drive high price rises," he said.

Read more: Understanding the Russia-Ukraine crisis: Yahoo News explains

"And, yes, ultimately feed through to customers and that could be at the scale of what we've seen before."

While the UK only receives around 1% of its gas from Russia, the rest of the continent is heavily reliant on supplies from Putin, meaning shortages across Europe could push up the cost of all energy for all and have a knock-on effect on the UK.

Writing in The Times on Monday, Boris Johnson renewed his pledge to slap Russia with sanctions should it invade Ukraine.

"For our part, British sanctions and other measures will be ready for any renewed Russian attack," he said.

"The government will ask parliament for new powers to sanction a wider range of Russian individuals and entities, including any company linked to the Russian state or operating in a sector of strategic importance to the Kremlin."