UK’s heating oil households need stronger protection, watchdog finds

Josie Clarke, Press Association Consumer Affairs Correspondent

Households fuelled by heating oil need stronger protection to match those using gas and electricity, amid warnings that price volatility may become increasingly common, a regulator has said.

The Competition and Markets Authority (CMA) has recommended that the UK and devolved governments strengthen protections for the 1.5 million households reliant on heating oil, covering how prices are quoted, cancellations are handled and support for vulnerable consumers.

The CMA found that price increases after the Middle East conflict largely reflected rising wholesale costs but that, although suppliers had not profited materially from the crisis, consumers were not as well protected as those connected to the grid.

It launched a market study into the sector heating oil sector after conflict in the Middle East caused significant disruption leading to average retail prices peaking at 92% higher.

Gordon and Buchan Conservative MP Harriet Cross wrote to the CMA in March calling for an investigation, as well as to Energy Secretary Ed Miliband to request the Government helps households who cannot afford the sudden price hikes.

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

Ms Cross said she had been contacted by several rural residents who had been hit with price increases, rising from £500 for 700 litres of heating oil in January to more than £1,000 since the start of the war, with lengthy delivery times.

Unlike mains gas and electricity, heating oil is typically bought in large volumes, meaning households can face bills of around £500 or more at a time.

The CMA found that prices tended to be lowest in Northern Ireland, where over 60% of households rely on heating oil, but those in many remote areas – including parts of Scotland – generally had less choice of suppliers and faced higher prices due to the increased costs of serving these areas.

The lack of protection for these households became “especially problematic” during periods of volatility – for example, where demand increases as a result of more severe weather conditions or where supply is disrupted by geopolitical developments – “both of which may become more common in future”, the CMA warned.

It has recommended that governments require suppliers to register and meet minimum standards, which include how prices are quoted, cancellations are managed and giving households access to independent dispute resolution.

Suppliers should also clearly signpost available payment plans and minimum purchase volumes, and create a register for vulnerable households to make it easier to protect them.

The CMA is also recommending a review of rules and regulations around minimum order volumes to allow people to buy smaller amounts of heating oil.

Stronger safeguards

CMA chief executive Sarah Cardell said: “Heating our homes and having reliable hot water are basic needs.

“While the home heating oil market is generally competitive, that is not enough to ensure good outcomes for all.

“Stronger safeguards are needed – including regulatory oversight and better support for vulnerable consumers as well as communities living in areas of the UK that are particularly exposed to higher and more volatile prices.

“These practical changes will help ensure people receive fair treatment, clear information and appropriate support when disruptions occur.

“We have also found that around 1,700 customers were left in limbo by some suppliers after orders were cancelled as the crisis was unfolding.

“While it’s encouraging that some suppliers have agreed to compensate customers, a number of firms still have not.

“We’ll be pressing them to do so and are preparing to take enforcement action if they don’t.”

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