Heating oil customers to get compensation after price hikes

Heating oil customers who had their orders cancelled and prices raised when the US-Israel war with Iran broke out will get compensation, the competition watchdog has said.

Some 1,700 households were forced to "re-order at significantly higher prices or go without fuel" costing them up to £350, the Competition Markets Authority (CMA) said.

Some suppliers have agreed to compensate customers and the regulator is planning legal action against those who have so far refused to do so, it added.

The UK and Ireland Fuel Distribution Association (UKIFDA), which represents heating oil suppliers, said "there were a small number of cases found which require redress".

Wholesale oil prices jumped from around $70 a barrel at the start of Iran war in February to almost $120 a barrel by the end of March as the conflict disrupted the transportation and production of energy in the region.

UK heating oil prices also jumped around this time. The CMA said on Wednesday that "average retail prices were, at their peak, 92% higher".

The CMA's investigation into the heating oil market found the price increases after the Iran war largely reflected rising wholesale costs and suppliers have not profited materially from the crisis.

However, it concluded heating oil customers are not as well protected as those connected to the energy grid.

It has recommended new regulations over how prices are quoted and cancellations are handled as well as "better support for vulnerable consumers".

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."

UKIFDA chief executive Ken Cronin said: "We will work with all government bodies on the recommendations set out in this report."

Meanwhile, the CMA has not said how many suppliers have agreed to compensate customers for cancelled orders, how many customers will receive a pay out, or how much they will get.

"Those who paid more to replace their cancelled order 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," it said.

"[We are] preparing to take court-based enforcement action against firms that fail to compensate customers voluntarily," it added.

The BBC understands more details will be provided once the scheme is up and running.

The CMA's report on the heating oil sector follows a four-month investigation launched in March.

Those who use heating oil often store it in a tank outside their property and are among the first to feel the impact of rising prices.

Some 1.5 million households depend on heating oil, but do not have the same consumer protections as electricity and gas customers, according to the CMA.

Most of those are in Northern Ireland, where the watchdog says 60% of households rely on it.

Anthony Maines, 31, from Seaton Delaval in Northumberland, said he had paid £463.83 for 700 litres of heating oil on 28 February.

He placed the through a broker when he saw the US and Israel first attacked Iran, but says the order was cancelled a few days later.

He says he was then forced to reorder 500 litres of oil for around £700 through a different broker.

He says he decided to lock in the cheaper price at the start of the conflict because he predicted the war would cause prices to rise.

Anthony agrees with the CMA's approach, especially after his experience.

"It felt like I was being punished for doing the sensible thing," he says.

He received a partial resolution through his broker who agreed in May to honour the original price he paid at the end of February, but by then he had already paid elsewhere at a higher price for his oil.