Draft legislation to introduce a price cap on “rip-off” energy tariffs is to be published by the Government today.

Ofgem will bring in a cap on poor value standard variable or other default tariffs under the Draft Domestic Gas and Electricity (Tariffs Cap) Bill to help more than 18 million customer accounts in Great Britain.

The BEIS select committee will be asked to scrutinise the draft legislation to help build cross-party consensus on the workings of the cap as proposed in the Prime Minister’s speech last week.

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The Government said it had taken the step because the energy market “does not operate in the interests of the majority of consumers”, adding: “While we are in favour of free markets, we will always take action to fix them when they’re broken.”

The Competition and Markets Authority (CMA) found that customers of the Big Six energy suppliers on standard variable and default tariffs are paying £1.4 billion a year more than they need to.

The draft bill follows Wednesday’s announcement by the energy regulator that it is to extend its prepayment price cap to one million more vulnerable households this winter, saving them £120 a year, although it admitted this would not take effect until February.

The Government said it welcomed the action by Ofgem but believed this could go further to protect everyone on default tariffs “from the unfair practices currently seen in the market affecting two-thirds of households in Great Britain”.

Prime Minister Theresa May said: “I have been clear that our broken energy market has to change – it has to offer fairer prices for millions of loyal customers who have been paying hundreds of pounds too much.

“Today’s publication of draft legislation is a vital step towards fixing that and in offering crucial peace of mind for ordinary working families all over the country.”

Business and Energy Secretary Greg Clark said: “The energy market is broken. It punishes loyalty – the independent competition authority found millions of people who are customers of the Big Six suppliers are overpaying to the tune of £1.4 billion a year.

“That is simply wrong. While five million households will see their bills capped from this winter, I want to see every household protected from rip-off bills.

“That is why we have published this draft legislation today – sending a clear message to suppliers they must act to put an end to loyal consumers being treated so unfairly.”