The new energy price ceiling will come into effect on January 1, saving eleven million customers an average of £ 76 a year on their gas and electricity bills.
The regulator Ofgem has set the maximum limit of £ 1,137 per year for a typical binary customer who pays his bill by direct debit.
This means that providers must lower the price of their standard rates to the ceiling or below.
The upper limit is updated every year in April and October.
Households in England, Scotland and Wales with a duty-paid allowance should fare better after the cap. Consumers in Northern Ireland have a separate energy regulator and already have a price cap.
In the UK, more than half of all households are in default rates – usually a standard variable deal – because they have never changed or have not lately done so.
How much they will save depends on how much energy they consume, what tariff they use, whether they have both gas and electricity, and how they pay for their energy.
People who consume a typical amount of gas and electricity save around £ 76 on average, while those with the most expensive rates save about £ 120.
"Urgently needed protection"
Ofgem's Chief Executive Dermot Nolan said: "The price cap will ensure that suppliers do not devour their nest and energy costs rise as energy costs rise or fall, and energy costs reflect the underlying costs of heating and lighting our homes . "
Mayor of Citizens Advice, Gillian Guy, said: "This price cap finally provides much-needed protection for loyal households on long-term outage fares.
"Although the cap means people will pay a fairer price, it will not be the best deal on the market, and by purchasing and switching fares or providers, people will likely be able to save a significant amount of energy costs ,
Wholesaling energy costs have risen significantly over the past year, and if so, Ofgem is likely to announce a rise in the April cap level in February.
MoneySuperMarket energy expert Stephen Murray said, "This means we could see persistent pain for three months and then 12 to 18 months for people who do nothing and the regulator checks their bills."
Ofgem said that customers could be confident that an increase in the cap reflects "only the changes in the actual cost of providing the gas and electricity they consume, not the suppliers' profit orientation".