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Back|Heating oil customers face tough winter despite shake-up promise
Heating oil customers face tough winter despite shake-up promise
Developing
BBC Business·3 hours ago·Energy·2 min read

Heating oil customers face tough winter despite shake-up promise

Quick Look

  • The UK government has pledged to tighten regulation of the heating oil market, promote competition and improve compensation routes for customers after prices nearly doubled in the past year, following the outbreak of the US-Israeli war with Iran.
  • Despite calls to extend the energy price cap to heating oil, no such proposal has been made, though a £53m support package for low-income families was announced in March and the Competition and Markets Authority found 1,700 households were forced to reorder at higher prices or go without fuel, costing up to £350 each.

AI-generated summary

Why It Matters

Heating oil prices have nearly doubled in the past year following the outbreak of the US-Israeli war with Iran, leaving many customers facing significantly higher bills. Unlike electricity and gas customers, heating oil users do not benefit from the UK's energy price cap, which is set by Ofgem and applies only to England, Wales and Scotland. Most heating oil customers are in Northern Ireland, where regulation is separate.

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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.

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".

What to Watch

AI outlook — possibilities, not facts

  • The UK government will implement a strengthened regulatory regime for the heating oil market in England, Scotland and Wales, following the CMA's recommendations.

    Likely · Within months

  • Ofgem will extend its regulatory oversight to heating oil in England, Scotland and Wales.

    Likely · Within months

Open Questions

  • ?When will the stricter rules for the heating oil market take effect?
  • ?Will the government extend the energy price cap to heating oil customers?
  • ?How will the proposed regulatory regime differ from existing protections for electricity and gas?
  • ?What specific compensation routes will be made available to customers if things go wrong?

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This article was originally published by BBC Business.

Quick Look

  • The UK government has pledged to tighten regulation of the heating oil market, promote competition and improve compensation routes for customers after prices nearly doubled in the past year, following the outbreak of the US-Israeli war with Iran.
  • Despite calls to extend the energy price cap to heating oil, no such proposal has been made, though a £53m support package for low-income families was announced in March and the Competition and Markets Authority found 1,700 households were forced to reorder at higher prices or go without fuel, costing up to £350 each.

AI-generated summary

Story signals

News tone
Negative
Emotional intensity
High
News value
Moderate
Global impact
National
Urgency
Developing
Follow-up likelihood
Likely
Relevance window
Weeks

Source & Reliability

Source
BBC Business
Story type
Hard news
Source quality
Full
Published
3 hours ago
heating oil
price cap
competition and markets authority
heating oil
Polly Billington
Nick
Tim Buckman
Competition and Markets Authority
Ofgem
Boiler Juice
National Energy Action
West Suffolk
Northern Ireland
England
Scotland
price cap
competition and markets authority
ofgem
northern ireland
polly billington
national energy action

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