Heating oil customers face tough winter despite shake-up promise

Heating oil customers in the UK are bracing for expensive winters, despite promises of improved regulation from the government. Officials have pledged tighter rules, increased competition, and clearer compensation for consumers should problems arise. Minimum order levels for some customers are set to be reviewed as part of the proposed changes.

Prices for heating oil have nearly doubled over the past year, prompting calls for capping at levels similar to those for gas and electricity. However, no such change appears imminent from the government. The administration has pledged to collaborate with the industry to develop a regulatory framework for heating oil, safeguarding consumers while encouraging competition.

Meanwhile, oil users have received discounts for heat pumps, a code of practice is in place, and the minimum order volumes for certain consumers will be reevaluated. Domestic tanks typically store between 1,000 and 2,000 litres of fuel, leaving some homeowners to shell out for more oil than necessary. Prime Minister Boris Johnson announced a £53 million support package for low-income families using heating oil in March.

The funding is distributed by local authorities, each setting their own eligibility criteria. A Competition and Markets Authority (CMA) inquiry discovered that 1,700 households were compelled to reorder at higher prices or go without fuel after the US-Israeli conflict with Iran began, costing them up to £350 apiece. Nevertheless, those whose orders were cancelled and prices increased were subsequently offered compensation.

The government has now agreed to implement the CMA's recommendation to strengthen sector regulation. Energy Minister Polly Billington stated that thousands of heating oil consumers felt powerless when faced with soaring oil and gas prices earlier this year. "We won't accept that." She emphasized that energy is an essential necessity, and people should not have to second-guess their market protection.

"That's why we will reform the sector." A heating oil user from West Suffolk named Nick shared his concerns with the BBC's Your Voice program. He mentioned that off-grid households remain a significant policy oversight for the government. "Any protection from the UK government for domestic heating oil users would be greatly appreciated, provided it applies to all domestic heating oil users," he added.

He and his partner rent a three-bedroom home and have witnessed prices more than double in a year, reaching a quote of 111p per litre. Nick called for tax cuts or extending the price cap to heating oil, ideas also proposed by charity National Energy Action. Boiler Juice's chief executive, Tim Buckman, echoed the sentiment, stressing that merely implementing regulation will not lower consumer prices.

"What we would like to see is the VAT off heating oil or targeting that specifically," he stated. Approximately 1.5 million households rely on heating oil, but they lack comparable consumer safeguards to those enjoyed by electricity and gas customers. However, energy regulator Ofgem, which sets the cap for standard variable tariffs, only oversees England, Wales, and Scotland.

Most heating oil customers reside in Northern Ireland, where 60% of households depend on it, but regulation is distinct there. It is probable that Ofgem will oversee heating oil in England, Scotland, and Wales, and the UK government has pledged to engage with the Northern Ireland Executive as they contemplate these recommendations concurrently.