More than 1,700 households who had their heating oil orders cancelled as prices surged during the US-Israel war with Iran are to receive up to £350 each in compensation, the competition watchdog has announced.
The Competition and Markets Authority (CMA) said some customers were forced to “re-order at significantly higher prices or go without fuel”, costing them as much as £350. 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.
“1,700 heating oil customers to get up to £350 compensation after orders cancelled during Iran war price surge”
The crisis unfolded in February when wholesale oil prices jumped from around $70 a barrel to almost $120 by the end of March, as the conflict disrupted energy production and transportation in the region. UK heating oil prices followed, peaking at 92% higher, according to the CMA.
“While it’s encouraging that some suppliers have agreed to compensate customers, a number of firms still have not,” said Sarah Cardell, the CMA’s chief executive. “We’ll be pressing them to do so and are preparing to take enforcement action if they don’t.” The regulator said it is preparing to take court-based enforcement action against firms that fail to compensate customers voluntarily.
The CMA’s investigation found that the price increases largely reflected rising wholesale costs and that suppliers have “not profited materially from the crisis”. However, it concluded that heating oil customers are not as well protected as those connected to the energy grid, and recommended new regulations on how prices are quoted and cancellations handled, as well as “better support for vulnerable consumers”.
Around 1.5 million UK households depend on heating oil, mostly in rural areas not connected to the mains gas network. Unlike gas and electricity, oil is typically bought in large volumes, with bills often exceeding £500 at a time.
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.”
Ken Cronin, chief executive of the UK and Ireland Fuel Distribution Association (UKIFDA), said: “We will work with all government bodies on the recommendations set out in this report.”
The CMA has not yet disclosed how many suppliers have agreed to compensate customers, how many will receive payouts, or the exact total compensation. More details are expected once the scheme is operational.