Compensation for Heating Oil Customers After Price Increases
Heating oil customers who experienced order cancellations and price increases following the outbreak of the US-Israel conflict with Iran will receive compensation, according to the Competition Markets Authority (CMA).
Approximately 1,700 households were compelled to either reorder heating oil at substantially higher prices or go without fuel, incurring costs of up to £350, the CMA reported.
Some suppliers have agreed to provide compensation, while the regulator is preparing to initiate legal proceedings against those who have not yet complied.
The UK and Ireland Fuel Distribution Association (UKIFDA), representing heating oil suppliers, acknowledged that "there were a small number of cases found which require redress."
Wholesale oil prices rose sharply from around $70 per barrel at the start of the Iran conflict in February to nearly $120 per barrel by the end of March, as the war disrupted energy production and transportation in the region.
Correspondingly, UK heating oil prices increased during this period. The CMA stated on Wednesday that "average retail prices were, at their peak, 92% higher."
The CMA's investigation into the heating oil market determined that the price hikes following the Iran war largely mirrored rising wholesale costs, with suppliers not gaining significant profits from the crisis.
However, the authority concluded that heating oil customers lack the protections afforded to those connected to the energy grid.
Recommendations include new regulations on price quotations and order cancellations, as well as enhanced support for vulnerable consumers.
Chancellor Rachel Reeves commented,
"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."
UKIFDA chief executive Ken Cronin stated,
"We will work with all government bodies on the recommendations set out in this report."
The CMA has not disclosed how many suppliers have agreed to compensate customers, the number of customers to be reimbursed, or the amounts involved.
It explained,
"Those who paid more to replace their cancelled order will receive a payment covering the difference, while those who did not buy replacement oil will have their original orders honoured at the agreed price."
Additionally,
"[We are] preparing to take court-based enforcement action against firms that fail to compensate customers voluntarily."
The BBC understands further details will be announced once the compensation scheme is operational.
The CMA's report follows a four-month investigation launched in March into the heating oil sector.
Heating oil users typically store fuel in tanks outside their homes and are among the first affected by rising prices.
Approximately 1.5 million households rely on heating oil but do not benefit from the same consumer protections as electricity and gas customers, the CMA noted.
The majority of these households are in Northern Ireland, where the watchdog reports that 60% depend on heating oil.
Customer Experience: 'Punished for Doing the Sensible Thing'
Anthony Maines, 31, from Seaton Delaval in Northumberland, shared his experience. He paid £463.83 for 700 litres of heating oil on 28 February through a broker after observing the US and Israel's initial attacks on Iran. However, his order was cancelled a few days later.
He was then compelled to reorder 500 litres of oil at approximately £700 through a different broker.
Anthony explained that he chose to lock in the lower price early in the conflict, anticipating that the war would drive prices up.
He supports the CMA's approach, particularly after his personal ordeal.
"It felt like I was being punished for doing the sensible thing,"
he said.
He received partial resolution when his broker agreed in May to honour the original price paid in late February, although by then he had already purchased oil elsewhere at a higher cost.
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