The UK Government has announced plans to introduce formal regulation to the heating oil market. This follows recommendations from the Competition and Markets Authority (CMA) after off-grid households faced sharp price increases, supply disruptions, and sudden order cancellations during recent global energy crises.
Unlike mains gas and electricity users, the approximately 1.5 million households across the UK that rely on heating oil currently sit outside the Ofgem price cap. This structural gap left consumers fully exposed when geopolitical tensions in the Middle East caused retail prices to surge from around 60p per litre to over 120p per litre in early spring.
CMA Findings and Consumer Protections
Following a detailed market study, the CMA concluded that while the home heating oil sector is generally competitive and suppliers did not profit materially from the crisis, consumers lack vital safeguards available to grid-connected energy customers. The inquiry highlighted a distinct lack of consistent support standards for vulnerable customers and limited access to formal alternative dispute resolution mechanisms.
Energy Minister Polly Billington addressed the policy shift. She stated that thousands of heating oil customers felt they had nowhere to turn when facing exorbitant costs earlier in the year. The government confirmed it will accept the CMA’s recommendations to build a structured regulatory regime.
"Energy is an essential good and people should not have to think twice about whether they're protected in the market. That's why we will reform the sector." – Polly Billington, Energy Minister
Addressing Cancelled Orders and Compensation
A primary catalyst for government intervention was the discovery that approximately 1,700 households were left stranded after suppliers cancelled existing orders during the height of the market volatility. Many customers were subsequently forced to reorder fuel at significantly inflated prices, incurring extra costs ranging between £150 and £350.
The CMA established that these cancellations potentially constituted breaches of contract. Following regulatory pressure, several suppliers agreed to voluntary compensation schemes, refunding the cost difference to affected consumers or honoring original prices for unfulfilled orders. The CMA is actively preparing court-based enforcement actions against firms that refuse to compensate customers.
Proposed Regulatory Changes and Industry Impact
Under the newly proposed framework, working alongside devolved administrations and the Northern Ireland Executive, the government intends to implement several key market reforms:
- Mandatory supplier registration and compliance with minimum operating standards.
- Clearer guidelines on how prices are quoted and how order cancellations are managed.
- Guaranteed consumer access to independent alternative dispute resolution services.
- Mandatory signposting of available payment plans and a formal register to protect vulnerable rural households.
- A comprehensive review of minimum order volumes-often set at 500 litres-to allow customers to purchase smaller, more affordable amounts.
Industry stakeholders and consumer advocacy groups have welcomed the push for transparency. However, debates continue regarding whether additional fiscal measures, such as VAT reductions or direct price capping, will be necessary to shield remote and off-grid communities from ongoing global energy shocks.
