Households that rely on heating oil have been promised tighter regulation of the sector by the government, as bills continue to climb through the winter.
Ministers said they would work with the industry to “develop a regulatory regime for the heating oil market, protecting consumers and promoting competition”.
The commitment follows a review by the Competition and Markets Authority (CMA), which recommended strengthening oversight of the market.
Under the plans, rules would be tightened, competition encouraged and customers given clearer routes to compensation when things go wrong. Minimum order levels imposed on some customers would also be reviewed.
There is no indication, however, that the government intends to bring heating oil within the same price cap that applies to standard variable gas and electricity tariffs in England, Scotland and Wales, nor any date for when the stricter rules would come into force.
Campaigners had pressed for heating oil users to receive the same capped protection as mains gas and electricity customers.
Prices close to doubling
Heating oil prices have come close to doubling over the past year, climbing sharply since the outbreak of the US-Israeli war with Iran.
In March, the government set out a £53m support package for low-income households that use heating oil. The funding is administered by local authorities, which apply their own eligibility criteria.
The CMA’s subsequent inquiry found that 1,700 households were forced to “re-order at significantly higher prices or go without fuel” after the war began, at a cost of up to £350 each.
Customers whose orders were cancelled and prices raised were told they were entitled to compensation.
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.”
Minimum orders under review
Industry practices that set minimum order volumes at 500 litres for some consumers will be examined, the government said. Domestic tanks typically hold between 1,000 and 2,000 litres.
Ministers said the requirement had left some people paying for more heating oil than they needed.
Alongside the review, oil users have been offered discounts on heat pumps and a voluntary code of practice is already in place.
Customers call for tax cuts
Nick, a 28-year-old heating oil customer from West Suffolk who rents a three-bedroom home with his partner, told the BBC’s Your Voice that “off-grid households remain a major policy blind spot”.
He said prices had more than doubled in a year, with quotes reaching 111p per litre.
“Heating my home is now no longer another household bill, but almost an investment,” he said.
He called for tax cuts for customers or the extension of the price cap to heating oil — a demand also made by the charity National Energy Action.
Tim Buckman, chief executive of the price comparison site Boiler Juice, told the BBC he wanted stronger protections for consumers but said the central issue was the doubling of heating oil costs since the war began.
“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,” he said.
Regional split
About 1.5 million households depend on heating oil, but they do not enjoy the same consumer protections as electricity and gas customers.
Ofgem, the energy regulator that sets the cap on standard variable tariffs, only covers England, Wales and Scotland.
Most heating oil customers live in Northern Ireland, where 60% of households rely on it and where regulation is handled separately.
Ofgem is likely to regulate heating oil in England, Scotland and Wales, while the UK government said it would “engage with the Northern Ireland Executive as they consider these recommendations in parallel”.
COMMENTS