Competition watchdog warns suppliers over soaring heating oil costs

The competition watchdog has warned that it expects consumers who have ordered heating oil to receive it at the agreed price, as the Middle East conflict sends the cost of the fuel soaring.

The Competition and Markets Authority (CMA) said it “won’t hesitate to take action” if it suspects consumer or competition law is being broken.

The CMA’s statement came as households that rely on heating oil are already grappling with rising costs due to disruption caused by the conflict.

Home heating oil is used by around 1.5 million households in the UK, but sudden volatility in the global oil trade has caused prices to spike by up to £100 in the past week alone.

According to Welsh Government figures, around 10% of households in Wales use oil central heating, close to 130,000 properties and the majority of those are in rural areas where the housing stock tends to be older and less well insulated and heating costs tend to be a third more expensive as a consequence.

The most recent Welsh Housing Conditions Survey, which covered 2017-18, showed the most common fuel type in most urban and rural dwellings was gas, although urban dwellings were more likely to use gas (93%) than rural dwellings (59%). Overall, 28% of rural dwellings In Wales used oil.

In Northern Ireland, 62.5% of homes rely on the fuel, compared to the UK average of just over 5%.

Price cap

Heating oil customers fall outside of Ofgem’s energy price cap protections, which currently fixes prices until the end of June.

Emma Cochrane, acting executive director for consumer protection at the CMA, said: “We know the situation in the Middle East is putting pressure on heating oil prices, and we recognise that this will worry people who may find it hard to afford these extra costs.

“Generally, we would expect that customers who have placed orders for heating oil should receive it at the agreed price. Suppliers should be clear what they are charging and terms must be fair.

“We won’t hesitate to take action if we suspect that consumer or competition law is being broken.”

Earlier on Monday, Energy Secretary Ed Miliband and energy minister Michael Shanks wrote to UK and Ireland Fuel Distributors Association chief executive Ken Cronin, telling him that the CMA was gathering evidence and looking at whether consumers were being treated fairly.

The letter stated: “We want to strongly remind you of your commitments under the UK and Ireland Fuel Distributors Association (UKIFDA) Customer Charter and Code of Practice and that the industry remains fully subject to consumer protection and competition law, overseen by the Competition and Markets Authority (CMA).

“The Minister for Energy has today spoken to the CMA who will now gather evidence on the situation in the market and look at whether consumers are being treated fairly.

“We will be talking to them again in the coming days and they have the power to launch an investigation into anything relating to unfair contract terms, misleading consumer practices or anti-competitive behaviour.

“Where there is evidence that consumers are being treated unfairly, we will act accordingly and ensure that the appropriate regulatory bodies are engaged.”

Market conditions

The letter continued: “To be clear, our firm expectation is that pricing remains fair, transparent and fully justifiable, reflecting genuine market conditions.

“Customers should be provided with clear, timely and clear explanations for any price changes, including where prices are confirmed shortly before delivery.”