Heating oil customers are set to receive up to £350 in compensation for cancelled orders, following an investigation by the UK competition watchdog, the Competition and Markets Authority (CMA). This is a significant development for the 1.5 million households in the UK, mostly in rural areas, that rely on heating oil for warmth, cooking, and hot water. The compensation comes as a response to the price surge caused by the war in the Middle East, which led to a 92% jump in heating oil prices to 123p a litre at its peak in April. The CMA's investigation revealed that about 1,700 customers were affected by potential contract breaches, with many having to pay significantly more or go without fuel after their orders were cancelled.
The CMA's chief executive, Sarah Cardell, emphasized the situation's impact on customers, stating that they were left in limbo. She also highlighted the need for stronger safeguards and recommended a new regulatory regime for heating oil suppliers, including a register of suppliers and minimum standards for order cancellations. This proposal aims to protect consumers from similar price shocks in the future.
The compensation scheme is a positive step, but Cardell noted that some suppliers have yet to agree to compensate customers. The CMA is taking a firm stance, threatening enforcement action against companies that fail to voluntarily compensate customers. This approach underscores the regulator's commitment to holding suppliers accountable for their actions during the crisis.
The price increases sparked by the Middle East conflict were largely attributed to rising wholesale costs, according to the CMA. However, the lack of protection for heating oil customers compared to those connected to the grid is a concern. The CMA's recommendation for a new regulatory regime could potentially address this issue, ensuring better consumer protection in the future.
The situation raises important questions about the resilience of the heating oil market and the need for robust regulatory frameworks to safeguard consumers during times of crisis. It also highlights the importance of transparency and accountability in the energy sector, especially when prices are volatile and can have a significant impact on households.
