The Competition and Markets Authority (CMA) has announced that heating oil customers whose deliveries were cancelled during the Middle East crisis will receive compensation of up to £350 each. The watchdog investigated complaints that suppliers scrapped existing orders and offered new deliveries at significantly higher prices as the conflict drove a surge in wholesale costs.
Scope of the Issue
According to the CMA, approximately 1,700 customers were affected by these potential contract breaches. While they received refunds for their original orders, many had to either pay much more or go without fuel. At the peak of the crisis in April, heating oil prices jumped 92% to 123p per litre, leading some customers to pay between £150 and £350 more.
Compensation and Enforcement
After the CMA intervened, several suppliers agreed to compensate those affected. Customers who paid more will receive the difference, while those who did not purchase replacement oil will have their original orders honored at the agreed price. CMA Chief Executive Sarah Cardell stated: “1,700 customers were 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. We’ll be pressing them to do so and are preparing to take enforcement action if they don’t.” The regulator is prepared to take court-based action against non-compliant companies.
Market Context and Recommendations
About 1.5 million UK households, primarily in rural areas without mains gas, rely on heating oil. Unlike grid energy, oil is bought in large volumes, often resulting in bills of £500 or more. The CMA’s market study found that price increases largely reflected rising wholesale costs, but it noted that “suppliers have not profited materially from the crisis, consumers are not as well protected as those connected to the grid.” To address this, Cardell recommended stronger safeguards, including a new regulatory regime with a supplier register, minimum standards for cancellations, and access to an independent dispute resolution service.
Government Response
Chancellor Rachel Reeves commented: “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.” The CMA continues discussions with holdout suppliers and is prepared to take enforcement action to ensure all affected customers receive compensation.
