UK Heating Oil Customers to Receive Compensation for Price Hikes

Heating oil customers in the UK who faced order cancellations and price increases following the US-Israel conflict will receive compensation, the Competition and Markets Authority (CMA) announced. Approximately 1,700 households were compelled to reorder fuel at significantly higher prices or go without, incurring costs of up to £350.

While some suppliers have agreed to compensate affected customers, the CMA is preparing legal action against those who have not yet complied. The UK and Ireland Fuel Distribution Association (UKIFDA), representing heating oil suppliers, acknowledged that a small number of cases require redress.

The price of wholesale oil surged from around $70 a barrel in February to nearly $120 a barrel by the end of March, driven by disruptions to energy transportation and production in the region due to the conflict. This led to a corresponding rise in UK heating oil prices, with average retail prices peaking at 92% higher, according to the CMA.

An investigation by the CMA found that the price increases largely reflected rising wholesale costs, and suppliers did not profit significantly from the crisis. However, the report highlighted that heating oil customers lack the same level of consumer protection as those connected to the national gas and electricity grids. The CMA has recommended new regulations concerning price quoting, cancellation handling, and improved support for vulnerable consumers.

Chancellor Rachel Reeves expressed concern over the lack of protection for these households and stated that the government would seriously consider what actions can be taken. UKIFDA chief executive Ken Cronin confirmed their commitment to working with government bodies on the report's recommendations.

The CMA has not yet disclosed the exact number of suppliers offering compensation, the number of customers eligible for payouts, or the specific amounts they will receive. Customers who paid more for replacement oil will be reimbursed for the difference, while those who did not purchase replacement fuel will have their original orders fulfilled at the agreed-upon price. The CMA indicated that court-based enforcement actions are being prepared against firms that fail to compensate customers voluntarily.

More details regarding the compensation scheme are expected once it is operational. The CMA's investigation into the heating oil sector commenced in March and spanned four months. Around 1.5 million households rely on heating oil, with a significant portion, approximately 60%, located in Northern Ireland, where they face the immediate impact of price fluctuations due to storage in individual tanks.