Watchdog says about 1,700 people were affected during a price surge triggered by the Middle East crisisHeating oil customers whose deliveries were cancelled when the war in the Middle East caused a price surge are to receive compensation of up to £350 each following an investigation by the UK competition
Zoe Wood
Heating oil customers whose deliveries were cancelled when the war in the Middle East caused a price surge are to receive compensation of up to £350 each following an investigation by the UK competition watchdog.
As the crisis unfolded, the Competition and Markets Authority (CMA) said it was investigating heating oil suppliers after complaints that existing orders were being scrapped, with customers offered new deliveries at a significantly higher price.
In a report published on Wednesday the CMA will say that about 1,700 customers were affected by these possible breaches of contract. While they had received refunds for their original order, many had to agree to pay a lot more or go without fuel.
The Iran war caused an energy price shock and at its peak, in April, heating oil jumped 92% to 123p a litre. Amid the turmoil the CMA said that some people may have paid between £150 and £350 more for their heating oil.
After being contacted by the watchdog, a number of suppliers have agreed to compensate those affected. Those who paid more 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.
The CMA’s chief executive, Sarah Cardell, said 1,700 customers had been “left in limbo” after their orders were cancelled. “While it’s encouraging that some suppliers have agreed to compensate customers, a number of firms still have not,” she said. “We’ll be pressing them to do so and are preparing to take enforcement action if they don’t.”
The regulator is still in talks with the holdout suppliers, adding that it is prepared to take court-based enforcement action against companies that fail to compensate customers voluntarily.
About 1.5m households in the UK, mostly in rural areas that are not connected to the mains gas network, rely on heating oil (paraffin, also known as kerosene) to warm their homes, cook food and provide hot water. Unlike mains gas and electricity, the oil is typically bought in large volumes, meaning households can face bills of £500 or more at a time.
The CMA said its market study found that the price increases sparked by the conflict in the Middle East had largely reflected rising wholesale costs. However, it added that while “suppliers have not profited materially from the crisis, consumers are not as well protected as those connected to the grid”.
To remedy this, Cardell said “stronger safeguards” were needed and that the CMA had recommended to the UK and devolved governments that a new regulatory regime for heating oil suppliers be introduced.
This would involve a register of suppliers and for them to agree to minimum standards, including on how order cancellations are managed. There should also be access to an independent dispute resolution service.
The chancellor, Rachel Reeves, said: “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.”
