UK Government Accepts CMA's Recommendation to Introduce Regulation for Heating Oil Market as Prices Hit Double Last Year's Level

The UK government has accepted the Competition and Markets Authority (CMA)'s recommendation to strengthen regulation of the domestic heating oil market, following a CMA market study into the retail supply of heating oil. The commitment was announced as prices for off-grid households reached approximately 111 pence per litre, roughly double the level of a year earlier. Heating oil is used by approximately 1.5 million households across the UK that are not connected to the gas grid, and those customers do not currently benefit from the same consumer protections as electricity and gas customers. Most heating oil customers are in Northern Ireland, where around 60% of households rely on the fuel and where regulation is handled separately from England, Scotland, and Wales. The government has committed to working with industry to develop a regulatory regime for the heating oil market, aimed at protecting consumers and promoting competition. Specifically, ministers said they would tighten rules, promote competition, and provide clearer compensation routes for customers if things go wrong. The CMA's study found that 1,700 households were forced to re-order at significantly higher prices or go without fuel after the start of the conflict involving Iran, and that those whose orders were cancelled and prices raised were entitled to compensation. Minimum order volumes, which can require some consumers to purchase 500 litres at a time despite domestic tanks typically holding between 1,000 and 2,000 litres, will be reviewed. Ofgem, which sets the energy price cap for standard variable tariffs in England, Scotland, and Wales, is expected to be the likely regulator for heating oil in those nations. The UK government said it would engage with the Northern Ireland Executive in parallel. Energy minister confirmed the government's position. No timeline for when the new regulatory regime will take effect has been announced.