Heating oil customers facing increased bills have been promised improved regulation of the sector by the government. Ministers stated they will enhance rules, encourage competition, and provide clearer compensation options for customers if issues arise. The government plans to review minimum order levels that some customers are currently subject to.
Heating oil prices have nearly doubled over the past year, prompting some campaigners to advocate for heating oil customers to receive the same price cap as those on variable gas and electricity tariffs in England, Scotland, and Wales. However, there is currently no indication from the government regarding such a change or the timeline for implementing stricter regulations.
Ministers indicated they would collaborate with the industry to develop a regulatory framework for the heating oil market aimed at consumer protection and competition enhancement. In the interim, discounts on heat pumps have been offered, a code of practice is in effect, and the practice of setting minimum order volumes at 500 litres for some consumers will be reviewed. Domestic heating oil tanks typically hold between 1,000 and 2,000 litres, which has resulted in some customers paying for more heating oil than necessary.
Prices have surged since the onset of the US-Israeli conflict with Iran. In March, the government announced a £53 million support package for low-income families using heating oil, with local authorities determining eligibility criteria.
An inquiry by the UK's Competition and Markets Authority (CMA) revealed that 1,700 households had to reorder at significantly higher prices or go without fuel after the conflict began, incurring costs of up to £350. Those whose orders were canceled and prices increased were informed they were eligible for compensation.
The government has agreed to implement the CMA's recommendation to enhance regulation in the sector. Energy Minister Polly Billington stated, "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, expressed concerns that "off-grid households remain a major policy blind spot" for the government. He emphasized the need for protection for all domestic heating oil users. He reported that his household has seen prices more than double, reaching quotes of 111p per litre, and described heating his home as an investment rather than just another household bill.
He called for tax cuts for customers or the extension of the price cap to heating oil, a demand echoed by the charity National Energy Action. Tim Buckman, chief executive of price comparison site Boiler Juice, acknowledged the need for stronger consumer protections but noted that simply implementing regulation would not lower prices. He suggested removing VAT on heating oil as a targeted approach.
Approximately 1.5 million households rely on heating oil, which lacks the same consumer protections as electricity and gas. The energy regulator Ofgem, responsible for setting the cap on standard variable tariffs, only oversees England, Wales, and Scotland. Most heating oil customers are located in Northern Ireland, where 60% of households depend on it and where regulation is separate. It is anticipated that Ofgem will regulate heating oil in England, Scotland, and Wales, and the UK government stated it would engage with the Northern Ireland Executive regarding these recommendations.