Heating oil customers to receive targeted support after price hikes
Around 1,700 heating oil customers may be entitled to compensation after suppliers cancelled orders during a sharp rise in prices earlier this year.
By BBC News
Around 1,700 households may receive compensation after heating oil orders were cancelled during a period of sharp price rises earlier this year.
The Competition and Markets Authority said some suppliers may have breached contracts when they cancelled confirmed orders as wholesale oil costs surged following conflict in the Middle East.
Although affected customers received refunds, many then had to place replacement orders at much higher prices or went without fuel.
The regulator estimates some households paid between £150 and £350 more as a result.
Following discussions with the CMA, a number of suppliers have agreed to compensate customers.
Those who paid more for a replacement delivery will receive the difference between the original and later price.
Customers who did not place another order will have their original order honoured at the price first agreed.
The regulator has not identified the suppliers involved or said how many have agreed to take part.
It is continuing discussions with those that have not offered compensation and is preparing court-based enforcement action against companies that refuse to provide redress voluntarily.
The action follows a market study into the domestic heating oil sector, which supplies around 1.5 million UK households.
Heating oil is particularly important in rural communities without access to the mains gas network. More than 60% of households in Northern Ireland depend on it.
The CMA found that average UK heating oil prices rose from 64p per litre in February to 104p in March, an increase of 64%.
Prices later peaked at 123p per litre in April, 92% above February’s average.
A typical 500-litre order cost around £320 in February and £520 in March, adding approximately £200 to a household’s bill.
Most of that increase reflected higher wholesale costs rather than suppliers making significantly larger profits.
The regulator concluded that the heating oil market was generally competitive, but customers lacked many of the protections available to households using mains gas and electricity.
Heating oil customers are not covered by Ofgem’s energy price cap and often have to pay around £500 or more in a single transaction when filling their tanks.
The CMA has recommended a new regulatory system requiring suppliers to register and meet minimum standards.
The proposals cover how prices are quoted, how cancellations are handled and access to independent dispute resolution.
Suppliers could also be required to provide clearer information about payment plans and minimum delivery volumes.
A register of vulnerable customers has been recommended so households most at risk can receive priority support during severe weather or supply disruption.
The regulator also wants the rules around minimum order sizes reviewed, which could make it easier for households unable to afford a full tank to buy smaller amounts.
The government had already announced more than £50 million of targeted support for low-income households affected by rising heating oil costs.
England was allocated £27 million, Northern Ireland £17 million, Scotland £4.6 million and Wales £3.8 million.
In England, support is being distributed through local authorities using the Crisis and Resilience Fund, with more funding directed towards areas where oil heating is common.
The CMA will now work with governments, industry and regulators on its recommendations while continuing efforts to secure compensation for affected customers.