The UK government has introduced legislation that will allow energy regulator Ofgem to put a price cap on standard variable tariffs (STVs).
The Domestic Gas and Electricity (Tariff Cap) Bill would put a limit on STVs until 2020, with the ability to extend caps annually until 2023.
However, green energy tariffs, where customers choose to get energy from renewables sources, will be exempt from the price caps, due to the vast expense of generating energy from such sources.
STVs are often the most expensive of tariffs and are used by 11 million UK households, contributing £1.4 billion in excess profits to energy companies.
Prime Minister Theresa May said: “It’s often older people or those on low incomes who are stuck on rip-off energy tariffs, so today we are introducing legislation to force energy companies to change their ways.
“Our energy price cap will cut bills for millions of families. This is another step we are taking to help people make ends meet as we build a country that works for everyone.”
Members of the ‘big six’ energy firms have come out against the bill, saying they are anti-competitive, with Centrica saying last week that it will cut 4,000 jobs by 2020, partly due to the introduction of price caps.