The price of gas and electricity is set to see a major increase in 2022 after Ofgem reviewed its cap on energy bills.

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.

A reason for this increase is the price of gas on global markets. Gas prices are around four times higher than they were a year ago, and they have been high for months.

Until now Ofgem's price cap has protected customers, but it is reviewed every six months, and will be changed in April to take into account the price surge.

The Northern Echo: Millions of people in the UK will be affected (PA)Millions of people in the UK will be affected (PA) (Image: PA)

Demand is also high as the world comes out of successive lockdowns and businesses try to make up for lost time - many will need lots of gas for this.

As reported by Yahoo News, there are some further factors that could see more changes to your energy bills later this year.

What factors could impact your energy bill?

A further price rise

Analysts have predicted that the energy price cap could in fact go up again when it is reviewed later this year.

Yahoo News report that 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.

Frequent changes to energy bill 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.

This change would be controversial, as some argue that consumers could end up paying more if energy costs are rising, whilst the alternative view is that it provides a much more accurate cap for bills and protects customers from sudden spikes.

The Northern Echo: There is a unprecedented worldwide demand for gas (PA)There is a unprecedented worldwide demand for gas (PA) (Image: PA)

The Russia-Ukraine crisis

Russia has caused tension amongst Western countries with its presence of armed forces on the Ukraine border.

If they were to invade then it could be a problem for European energy markets, which are highly dependent on Russian oil and gas.

Neil Kenward, director of strategy and decarbonisation at Ofgem, spoke on this potential problem.

He said: "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."