Households face the worst squeeze ever in the UK as the chancellor warned that energy prices could go up again in autumn and Ofgem hands itself new powers.

Families are already under pressure as their energy bills are set to rise £693 to a typical £1,971 a year.

However, the 54% increase announced by regulator Ofgem might not be the only one to hit households this year.

Rishi Sunak has warned Britons to brace for even higher energy costs in autumn as the price cap of £1,971 is likely to rise further in the autumn.

Ofgem is adjusting the price cap on bills twice as frequently, to address the volatility in the market.

Currently, the cap on what suppliers can charge only increases every six months, and dozens of energy suppliers went out of business in the last six months.

Read more: How to cope with rising energy and household bills

The collapses were caused by a massive rise in the price that energy companies had to pay for the gas they supply to households.

Because the price cap limited what suppliers could charge for the same gas, many were selling the fuel at a loss.

Now, Ofgem have given itself the power to step in should this happen again over the next six-month period. It could mean that bills go up again before October.

Nearly three million households were already behind on their energy bill payments even before the price rise last October.

“We have seen an extraordinary event in the energy market over the last few months. Something that’s a one in 30-year event,” Ofgem CEO Jonathan Brearley told Radio 4’s Today Programme.

“We’ve seen volatility and change in prices far above what has been expected and what is historical.”

Ofgem said that changes to the price cap on bills, including the ability to change it more often than twice a year, will reduce risks for suppliers.

The changes will come into force for the period between April and October, the eighth price cap period.

“The changes introduced in cap period eight will benefit customers by reducing systemic risks for suppliers," the regulator said in a letter to suppliers.

Read more: Inflation: Small businesses hit by record rise in costs

The government has sought to ease the cost-of-living crisis by offering most households £350 in support. However, critics have claimed this will do little to help those most affected.

“The catastrophic surge in the energy price hasn’t shocked anyone, but it will stun all of us facing runaway energy bills, and for many people it will blow the fuse on their financial resilience. If you’re on a lower income and your finances are already on a knife edge, this could send you tumbling into the abyss,” Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said.

“Meanwhile, if your home is draughty and poorly insulated, you could face unimaginable heating bills.”

The Resolution Foundation think-tank has predicted that five million households will be under “fuel stress”, twice the current number.

“For [the] poorest, it would have been better just to raise benefits in line with inflation,” said Paul Johnson, director of the Institute for Fiscal Studies (IFS). The organisation has said that an adult on £30,000 a year will be £400 poorer over the next financial year.

Matthew Fell, CBI chief policy director, said that while it is right to focus on the most vulnerable - there needs to be help for squeezed businesses.

“Short-term support must go hand-in-hand with a revamped retail energy market, setting a higher bar for market access and tougher stress testing for suppliers,” he said.

“Government must also step up the level of investment and pace of delivery in home energy efficiency improvements and push forward with ambitious plans to progress the clean energy transition.”

In all, 22 million households will be hit by the energy price hike in April.

Frances O’Grady, the general secretary of the TUC, said: “The chancellor’s announcement is hopelessly inadequate. For most families it’s just £7 a week and more than half must be paid back. It’s too little, it’s poorly targeted, and it’s stop gap measures instead of fixing the big problems.”

Analysis of the impact of Ofgem’s energy price cap rise by the New Economics Foundation (NEF) shows that the poorest 10% of families will see energy costs increase by 6% (£724) of their disposable income, a 7.5 times larger rise than the 0.75% of disposable income rise for richest 10% of families.

The analysis further shows that single parents, pensioners, and families with one or more disabled people are likely to be hardest hit by the rise in energy bills.

Read more: Rishi Sunak announces £350 for UK households energy bills

Higher bills for single parents will consume 2.5% (£647) of disposable income in April 2022, a 56% larger rise compared to the average family (1.6% of disposable income).

Pensioner households will see their bills rise by 2.3% (£634) of disposable income, and families with a disabled member by 2% (£682), which is 41% and 23% larger than the average, respectively.

University of Strathclyde’s Centre for Energy Policy (CEP) director Professor Karen Turner said: “Exacerbating wider cost of living pressures will be a blow for households across the UK, particularly those already struggling to heat their homes and pay for other basic goods and services.

“While the government has announced measures to soften and smooth the impacts of rising energy bills, more support will undoubtedly be required particularly for pensioners and low-income households.”

The chancellor responded by announcing a plan to soften the blow on households with £350 of support including £200 off energy bills from October and a £150 council tax discount for households within the A to D bands. The energy bill rebate is to be repaid over five years from next year.

Stephen Murray, energy expert at MoneySuperMarket, commented: “With the market under pressure, there remain no fixed deals cheaper than the cap announced this morning. If you're on your supplier's standard or default tariff, most industry guidance seems to be to stay put for the time being and to watch for competitive fixed deals to return.

“Like others in the industry, we support calls for government intervention to help ease the pressure on bill payers. Measures such as removing the VAT rate of 5% on energy bills would be a good start and would reduce the standard bill by about £90.

"We know both Ofgem and the government will be announcing further measures imminently. Whatever course of action they choose to take, they need to avoid just deferring costs that will still find their way into customers bills next winter."

Watch: How to save money on a low income