Heating oil customers facing soaring bills have been promised better regulation of the sector by the government. Ministers say they will tighten up rules, promote competition and give customers clearer compensation routes if things go wrong. Minimum order levels, set for some customers, will be reviewed. With prices close to having doubled in the past year, some campaigners have called for heating oil customers to benefit from the same cap as regular, variable gas and electricity tariffs in England, Scotland and Wales.
But there is no sign of the government proposing such a change, nor when the stricter rules will take effect. Ministers said they would work with industry to “develop a regulatory regime for the heating oil market, protecting consumers and promoting competition”. In the meantime, oil users have been offered discounts on heat pumps, a code of practice is in place, and industry practices setting minimum order volumes at 500 litres for some consumers will be reviewed. Domestic tanks typically hold between 1,000 and 2,000 litres.
The government said this had left some people having to pay for more heating oil than they might need. Buy now or wait and hope? Families face gamble on heating oil Prices have soared since the start of the US-Israeli war with Iran. In March, the government announced a support package worth £53m for low-income families who use heating oil.
The funding is distributed by local authorities, which set their own criteria for eligibility. A subsequent inquiry by the UK’s competition watchdog, the Competition and Markets Authority, found that 1,700 households were forced to “re-order at significantly higher prices or go without fuel” after the war broke out, costing them up to £350. But those whose orders were cancelled and prices raised were told they were entitled to compensation. The government has now announced it will accept the CMA’s recommendation to strengthen regulation in the sector.
Energy minister Polly Billington said: “Thousands of heating oil customers felt they had nowhere to turn when they paid the price of rising oil and gas costs earlier this year. “We won’t accept that. Energy is an essential good and people should not have to think twice about whether they’re protected in the market. That’s why we will reform the sector.” Nick, a heating oil customer from West Suffolk, told the BBC’s Your Voice that “off-grid households remain a major policy blind spot” for the government.
“Any protection from UK government for domestic heating oil users will be very welcome, providing this is for all domestic heating oil users,” the 28-year-old said. He rents a three-bedroom home with his partner. He said they had seen prices more than double in a year, to quotes of 111p per litre. “Heating my home is now no longer another household bill, but almost an investment,” he said.
He called on tax cuts for customers, or the extension of the price cap to heating oil – a demand also made by charity National Energy Action. Tim Buckman, chief executive of price comparison site Boiler Juice, told the BBC he wants stronger protections for consumers but the main problem was that heating oil is twice as expensive as it was before the war. “Just putting regulation in place is not going to reduce the price for customers. What we would like to see is the VAT off heating oil or targeting that specifically.” Some 1.5 million households depend on heating oil, but they do not have the same consumer protections as electricity and gas customers.
However, energy regulator Ofgem, which sets the cap for standard variable tariffs, only covers England, Wales and Scotland. Most heating oil customers are in Northern Ireland, where 60% of households rely on it, but where regulation is separate. It is likely Ofgem will regulate heating oil in England, Scotland and Wales, and the UK government said it would “engage with the Northern Ireland Executive as they consider these recommendations in parallel”.
