UK Government Promises Overhaul of Heating Oil Regulation Amidst Soaring Costs

The UK government has pledged to introduce stricter regulations for the heating oil sector, promising improved consumer protections and greater competition in response to escalating costs. The announcement comes as households dependent on heating oil face significantly higher bills, with prices nearly doubling in the past year.

Ministers stated their intention to work with the industry to develop a new regulatory regime. This framework is designed to safeguard consumers and foster a more competitive market. Key areas for review include minimum order levels, which have been set for some customers and may require them to purchase more oil than immediately needed. Domestic oil tanks typically hold between 1,000 and 2,000 liters, and the current minimum order of 500 liters for some consumers has been identified as a potential issue.

Campaigners and customers have called for heating oil users to receive the same price cap protections afforded to regular gas and electricity tariffs in England, Scotland, and Wales. However, the government has not indicated any plans to implement such a cap for heating oil.

In addition to regulatory changes, the government has offered discounts on heat pumps to users of heating oil. A code of practice is already in place, and the aforementioned minimum order volumes will be reviewed.

Consumers have expressed concerns about the sector being a "major policy blind spot" for the government. Nick, a heating oil customer from West Suffolk, reported that his heating costs have more than doubled in the past year, with quotes reaching 111 pence per liter. He described heating his home as "almost an investment" and called for tax cuts or an 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, emphasized that while stronger consumer protections are needed, the primary issue is the current high cost of heating oil. He suggested that reducing VAT on heating oil or offering targeted support could help lower prices for consumers, arguing that regulation alone will not achieve this.

Approximately 1.5 million households in the UK rely on heating oil and currently lack the same consumer protections as those using electricity and gas. The energy regulator, Ofgem, which oversees the price cap for standard variable tariffs, primarily covers England, Wales, and Scotland. A significant portion of heating oil customers, about 60% of households, are located in Northern Ireland, where regulation operates separately. The UK government indicated it would engage with the Northern Ireland Executive regarding these recommendations.