Ofgem chief executive Jonathan Brearley says "we know this rise will be extremely worrying for many people" and promises the regulator will ensure energy companies support their customers in any way they can.

He says the energy market has faced a huge challenge due to the increase in global gas prices, describing it as "a once in a 30-year event".

Brearley says Ofgem's role as energy regulator is to ensure that, under the price cap, energy companies can only charge a fair price based on the true cost of supplying electricity and gas.

"Ofgem is working to stabilise the market and over the longer term to diversify our sources of energy which will help protect customers from similar price shocks in the future," he says.

Millions are facing a sharp rise in how much they pay to heat and run their homes against the backdrop of soaring gas prices.

Here's a sense of how this rise in the price cap compares to others in recent years...

Image source, EPA

With the announcement that energy bills for about 22 million people are due to rise by 54% - a £693 hike for the average customer - attention will turn to the political response.

At about 11:30 GMT, we're expecting to hear from Chancellor Rishi Sunak who is due to outline his plans to help families with the rising cost of bills.

One possible approach is to provide loans to energy firms to help them reduce customers' bills - but it could mean deferring higher costs until later.

Stay with us for full coverage of his announcement.

Regulator Ofgem explains the increase in the price cap in a statement.

Image source, Getty Images

A large rise in the energy price cap will hit those on low incomes hardest, warns Dr David Deller, a senior research associate at the University of East Anglia.

Research by the Centre for Competition Policy shows that lower income households spend a considerably higher proportion of their total expenditure on energy than other households.

“This means energy bills are far more prominent to them and, more importantly, they are more likely to face difficult choices regarding whether to reduce their energy consumption or cut back on other spending."

He reckons that energy affordability difficulties will reach a level last seen around 2013 or possibly in the late 1980s.

The price cap sets what the average household in England, Scotland and Wales will pay for energy if they’re not on a fixed deal with their supplier.

But your individual bill will be different depending on whether you live in a small flat or a large house and what your energy use is.

It means standard tariffs will go up by 54%.

About 22 million customers will be affected by the change in the price cap when it comes into effect in April.

There’s a different rate for prepayment customers: their price cap will rise by £708 to £2,107.

Here it is: Regulator Ofgem has announced that the energy price cap will rise by £693 in England, Wales and Scotland from April.

That will cause bills for the average customer to rise to £1,971.

We're just about to hear the energy price cap announcement. Stand by...

Increasing energy bills are just one example of the current rise in the UK's cost of living. It's the reason 2022 is being described as the "year of the squeeze".

The BBC's Ros Atkins explains what's causing the steep increase in prices, how they are impacting households and what can be done about it.

Today Programme
BBC Radio 4

Image source, Iceland

Richard Walker, managing director of supermarket chain Iceland, is concerned "bricks and mortar" retailers and businesses are "going to bear the brunt" of rising energy prices.

He's told the BBC's Today programme, "I think it's safe to say 2022 is probably set to be the hardest year ever for many UK families".

"We are talking about energy prices and costs directly affecting consumers but that is also going to have a huge knock on effect for businesses too. In terms of grocery retail, every supermarket will be raising its prices."

Walker is urging the government to cut business rates to help firms cope with higher bills.

Kevin Peachey
Personal finance correspondent

Image source, Getty Images

To put any energy price rise in context, this is going to be one of the key factors in a cost of living crunch this year.

Retail consultant Kantar says recent evidence suggests people are typically going to face paying £180 more a year for their groceries.

The National Insurance increase in April will impact people to a different degree depending on their earnings.

This energy price rise, whatever the mitigating policies, is likely to cost the average household hundreds of pounds in the next year, and possibly more beyond that.

BBC Radio 5 Live

Chris is a care home worker who uses the Newtown Food Surplus scheme in Powys.

He tells BBC Radio 5 Live he's already given up his car as it was too costly to run and has been borrowing money off his mother-in-law to pay the bills.

"I'm on minimum wage," he says. "By the time you go to the shops, you've got no money left."

"I might lose my house because I can't afford it... I've already lost my car because I can't afford the petrol, tax and insurance, so I've got to walk everywhere or borrow my wife's car."

He says initiatives like the food surplus are "amazing" because everybody is so helpful.

"If you struggle, they say don't worry about putting money in today, put some in next week - or vice versa," he says.

BBC Radio 5 Live

How are people coping with all the recent increases in the cost of living?

Vicky Rowe is the founder of Newtown Food Surplus, a food distribution project in Powys, Wales which aims to prevent food waste.

She tells BBC Radio 5 Live many of the people helped by the project are in work and still struggling to put food on the table.

"The area we're in, it's predominantly people on lower wages," she says.

"There's carers, there's nurses - it's all those people who do an amazing job and are feeling the pinch.

"They're trying to make a decision over fuel in the car and what they're going to be putting on the table - if they can put anything on the table."

Ministers working out who to help and who will pay?published at 10:23 Greenwich Mean Time 3 February 2022

10:23 GMT 3 February 2022

Adam Fleming
Chief political correspondent

It looks like the government is throwing the kitchen sink at the problem of energy price rises.

Ministers have gone from the idea of only helping people on lowest incomes to giving a bit of help to virtually everyone.

But there are still lots of questions about these potential plans, for example, if there is a council tax rebate, what bands does it apply to? How does that interact with councils that are planning to raise tax?

Then you have the idea of loans to the energy company to help reduce bills. These will probably be paid back by us bill payers but just in the future.

There's also talk of the government increasing the support for the vulnerable through things like the warm homes discount and the winter fuel payment.

People will have to do a lot of calculations by the end of the day to work out who is getting helped and who will end up paying for this.

Plus, some Conservative MPs and Labour want the government to go further and cut VAT on fuel.

We're braced for a whole series of announcements today that will affect everyone's finances and the cost of living.

Here's what to watch out for:

• At 11:00 GMT, Ofgem will anounce the new energy price cap which will take effect in April - it is expected to add more than £600 to an average household's annual bill
• Shortly afterwards, Chancellor Rishi Sunak will set out how the government plans to help households with the cost of that price hike
• The Bank of England will announce whether the cost of borrowing will get more expensive, when it makes its interest rate decision at 12:00, which could increase mortgage costs for nearly two million homeowners

BBC Radio 5 Live

Nigel Pocklington, chief executive of supplier Good Energy, has told BBC Radio 5 Live Breakfast he is “reasonably certain” that people will see about a “50% increase in energy costs which will take the typical domestic consumption cost from £1,277 on the current cap - to somewhere around £1,950”.

“It’s an extraordinary both social and economic cost to bear,” he says.

He adds there are plans to help suppliers be able to smooth out payments for people having difficulty paying their bills.

“But there’s a real limit, frankly, to what we can do. We’re all operating on thin or negligible profit margins… so we don’t have a big buffer to offer, which is where the government has to step in.”

Kevin Peachey
Personal finance reporter

Image source, Getty Images

If you have not switched energy supplier for a while or your supplier went bust, then you will be among the 22 million households in England, Wales and Scotland who are affected by changes to the price cap.

At present, the cap means that the typical gas and electricity customer pays about £1,277 a year.

To be clear, the cap is on the amount that suppliers can charge per unit of energy, not overall bills, but a higher cap still means bills will be much higher.

There is also no limit to how much people can pay.

The more gas and electricity you use, the higher the bill will be.

The expected rise in energy costs will leave millions of people facing extreme choices over their budgets.

Industry analysts say they expect a typical household to face an annual increase of more than £600 on their energy bill.

We spoke to people in south-west London who are concerned about their household budgets.

There's been a worldwide squeeze on gas and energy supplies over the past year.

As a result, wholesale gas prices have risen to unprecedented levels.

Reasons for the increase include:

• a cold winter in Europe in 2020/21, which put pressure on supplies and, as a result, meant stored gas supplies dropped
• a relatively windless summer meant it was difficult to replenish those supplies
• increased demand from Asia - especially China - for liquefied natural gas

There are a number of technical and geopolitical issues at play as well, with many countries across Europe grappling with the same problems.

However, the UK is relatively hard-hit because it is one of Europe's biggest users of natural gas.

BBC Breakfast

Industry body Energy UK has acknowledged that many more households are likely to be affected by the spike in gas and electricity costs this year.

"Even average households will struggle to pay their bills," the organisation's chief executive Emma Pinchbeck tells BBC Breakfast.

She says amid record levels of gas prices, energy companies had already spent millions of pounds in extra support for customers this winter.

Pinchbeck adds: "What we've been doing is trying to get government to act with us... most European governments have provided support for both customers and businesses - and that's what we are expecting the [UK] government to do."