UK's heating oil households left exposed to price hikes, watchdog warns
The Competition and Markets Authority (CMA) has called on the Government to enforce stronger rules covering protections for these households.
Households that rely on heating oil need stronger consumer protections after warnings that price volatility could become more common, a watchdog has said.
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The regulator has argued that people who use heating oil should receive protections similar to those available to gas and electricity customers.
It estimates around 1.5 million households rely on heating oil and are not adequately protected against sharp price rises.
The Competition and Markets Authority (CMA) is calling for stronger rules covering how prices are quoted, how cancellations are managed, and how the companies work with customers who may be vulnerable.
The CMA found that price increases following the conflict in the Middle East largely reflected rising wholesale costs and that suppliers did not materially profit from the crisis. However, it said consumers were not as well protected as those connected to the gas and electricity grid.
After the conflict drove disruptions, and pushed average retail prices to a peak of 92% above normal levels, the watchdog launched a market study into the sector.
Heating oil customers are more vulnerable to price hikes because they fall outside Ofgem's energy price cap, which currently remains in place until the end of September.
Gordon and Buchan Conservative MP Harriet Cross wrote to the CMA in March, saying she had been contacted by rural residents whose heating oil bills had spiked. Some reported paying more than £1,000 for 700 litres of heating oil, compared with around £500 in January, while also facing lengthy delivery times.
Unlike mains gas and electricity, heating oil is often bought in large quantities, meaning households often face one-off bills of around £500 or more.
The lack of protection for these households became "especially problematic" during periods of volatility, including where demand increases as a result of factors such as supply becoming disrupted by geopolitical developments, "which may become more common in future", the CMA warned.
It has recommended governments require suppliers to register and meet minimum standards, including rules on the process behind providing price quotes and how companies handle their cancellations.
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.
“These practical changes will help ensure people receive fair treatment, clear information and appropriate support when disruptions occur.”
Reacting to the findings, Chancellor Rachel Reeves said: “When the conflict in the Middle East drove a sharp rise in heating oil prices, I acted quickly to get financial support to homes reliant on oil. I also asked the CMA to investigate the market to make sure consumers were being treated fairly."
“It is reassuring to know it is a competitive market but the lack of protection for these households does concern me, so we will look very seriously at what can be done.”