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New plans aim to avoid price shocks by changing bills every three months.

Every six months, the price cap in England, Scotland and Wales is changed.

The change will cause prices to rise and fall more quickly, according to Ofgem.

When the cap goes up, energy bills are expected to go up even more.

The situation was "deeply worrying" for many people, according to Ofgem.

In May of this year, Ofgem said that the average household would see an increase in income of £800 a year, but it now says that is not the case.

According to Cornwall Insight, the average household is likely to pay more in October and January than it previously thought.

The average bill was more than $2,500 a year.

Households in Northern Ireland have seen their bills rise despite the price cap not being in place.

Updating the price cap more frequently would allow energy suppliers to better predict how much energy they need to purchase for their customers, according to Ofgem. The risk of more suppliers failing could be reduced by this.

More than 30 UK energy companies have failed since early last year due to the price cap on wholesale gas prices.

The stability needed in the energy market will be provided by today's change which will reduce the risk of further large-scale supplier failures which cause huge disruption and push up costs for consumers. It is not in anyone's interest for more suppliers to fail.

It makes sense for the cap to be adjusted at regular intervals.

People would see the benefits quicker if energy prices fell.

The decision was said to be inhumane by Simon Francis.

"This decision will force more people into fuel poverty in the middle of winter, causing more stress on the health service and it may lead to more deaths this year," he said.

A full programme of emergency financial support, a rapid expansion of energy efficiency programmes and a commitment to bringing more cheap renewable energy on stream will help people stay warm this winter and into the future.

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The energy price cap is based on how much energy suppliers pay producers. The level of profits an energy supplier can make is capped.

After Covid restrictions were lifted, demand for gas went up and prices went up again.

Some European countries have had their gas supplies cut by Russia. Russian imports have been phased out in response to the invasion. Demand for other sources of energy has gone up due to this.

The price cap, which will be published at the end of August, will rise again, but by changing it every three months any reductions in wholesale prices will be passed on to customers.

It said paying a rate that is up to six months out of date in the current changeable market was "no longer sustainable and could mean either consumers paying too much for months if wholesale prices have fallen or suppliers are left unable to supply gas with the money they are allowed to charge if prices have

A chart showing energy price predictions
Analysis box by Colletta Smith, Consumer affairs correspondent

The lag time between wholesale price changes and the amount customers are charged would be cut by Ofgem, which would limit the risk of suppliers going bust. When wholesale prices are going down, that will mean you don't have to wait months before your bills are paid, so far so good.

The situation we're in right now is also true. Customer's bills will be added to when wholesale prices go up. Analysts aren't expecting global energy prices to drop anytime soon, so that means sharper shocks for the next.

It will be more difficult to budget as prices will change every three months and there is less time for suppliers to inform customers of changes.

Don't expect this change to save you any money. More than three quarters of households in Britain now face an energy price rise in January, when people can least afford it, as we head into the most difficult winter for a generation.