Liz Truss announced a freeze on gas and electricity prices in the UK

The measure will represent a saving of about 1,150 dollars a year per household that will be financed with Treasury funds and indebtedness, after ruling out a tax on oil companies

British Prime Minister Liz Truss announced on Thursday that her government will cap national energy prices for homes and businesses for two years to ease the cost of living crisis that has left people and businesses across the UK facing a winter gloomy.

Truss told lawmakers in Parliament that the two-year "energy price guarantee" means average household bills will not exceed 2,500 pounds ($2,872) a year for heating and electricity.

Bills were due to rise to 3,500 pounds ($4,000) a year from October, triple the cost of a year ago. Bills are skyrocketing due to the Russian invasion of Ukraine and the economic fallout from COVID-19 and Brexit.

"We're standing by this country this winter and next and addressing the root causes of high prices so we're never in the same position again, " Truss told lawmakers.

Companies and public institutions such as hospitals and schools will also receive support, but for six months instead of two years.

The government says the cap will reduce the UK's rising inflation rate by 4-5 percentage points. Inflation reached 10.1% in July and is expected to rise to 13% before the end of the year.

The government has not said how much the price cap will cost, but estimates put it at more than 100 billion pounds ($116 billion) . Truss has rejected opposition calls for an extraordinary tax on oil company profits . The cap will be paid with Treasury funds and through borrowing.

The opposition Labor Party says that means British taxpayers will have to foot the bill.

Workforce energy spokesman Ed Miliband accused Truss of rejecting a windfall tax "purely on the basis of dogma."

The announcement, on Truss's second full day in office, comes after a summer in which the government refused to say how it would respond. Former Prime Minister Boris Johnson was unable to make any major decisions after announcing in July that he would resign. Truss, who won the Conservative Party race to replace Johnson as leader, refused to announce his plans before taking office.

Truss , a free-market conservative, has said she prefers tax cuts to handouts , but the scale of the crisis has forced her to act.

The invasion of Ukraine has caused an energy crisis throughout Europe . Russia cut off supplies of cheap natural gas that the continent relied on for years to run factories, generate electricity and heat homes.

Britain imports most of its natural gas , although much of it from Norway. not Russia, so it is vulnerable to changes in world prices.

The UK has dramatically increased the amount of power generated by wind power in recent years and plans to build more nuclear power plants.

Truss also gave the green light to more oil and gas extraction from the North Sea and ended Britain's fracking ban. Both measures are opposed by environmentalists.

He also said the government would review progress on Britain's net zero emissions target by 2050.