Heating oil firms told to compensate customers over Iran war price hikes or face fines

Heating oil firms told to compensate customers over Iran war price hikes The CMA found heating oil customers lack the robust protections of those using gas or electricity - Bookmark - CommentsGo to comments Over 1.5 million households reliant on heating oil require stronger consumer protections, a regulator has warned, arguing they should match those afforded to gas and electricity customers as price volatility may become increasingly common. The Competition and Markets Authority (CMA) has urged UK and devolved governments to bolster safeguards for these homes. Its recommendations cover price quoting, cancellation handling, and support for vulnerable consumers. The regulator found recent price increases, following the Middle East conflict, largely reflected rising wholesale costs. While suppliers did not materially profit, the CMA concluded heating oil users lack the robust protections of those connected to the national grid. It launched a market study into the 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. 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.” 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.” Join our commenting forum Join thought-provoking conversations, follow other Independent readers and see their replies Comments