Following in the wake of oil price gouging earlier this year, new reforms have been announced by the Government to bring greater protection to homeowners using oil to heat their homes.
Despite the fact there are around 1.5 million homes heated by oil in the UK, it's the first time the market will be regulated and comes as a result of recommendations from the Competition and Markets Authority to strengthen the sector.
Initial measures will see better consumer protection in industry Codes of Conduct in the short term, but what else will follow?
Rural households set to benefit from the changes
As a result of the price hikes experienced following the outbreak of the conflict in the Middle East, the Government has already launched a compensation scheme for homeowners who were forced to pay extra for oil when orders were cancelled by suppliers. Around 1,700 homeowners were identified as being owed compensation and have since been, or are being contacted if they are set to receive money back from the scheme.
On top of the £53 million the Government gave in support at the time, the compensation offered some relief to those struggling, but didn't offer any long-term protection to rural households if the same thing happened again.
Minister for Energy Consumers Polly Billington said: "Thousands of heating oil customers felt they had nowhere to turn when they paid the price of rising oil and gas costs earlier this year. We won’t accept that. 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, holding heating oil suppliers to account and giving consumers confidence that they will get a fair deal."
Long-term plans are still to be determined
While the full set of plans and measures will be determined following consultations between the oil industry and the Government, early indications suggest that some industry practices, such as setting high minimum order values will be reviewed. Some suppliers currently have a 500 litre minimum order, which can be financially crippling. It is hoped that removing this will help to give homeowners breathing space to deal with the rising cost of living.
It is also planned to formalise industry standards so that customers are clear on what they can expect from their oil supplier and those households considered vulnerable will be better protected. In addition, guidelines will be established that make it far clearer how to apply for compensation if things go wrong.
Those using oil are also still eligible for extra funding through the Boiler Upgrade Scheme (BUS) if they are considering switching from oil or LPG to a heat pump. Instead of the standard £7,500 they can claim up to £9,000 and according to Government figures, 1,042 voucher redemptions were made in August for this.
Although with some sources suggesting the heat pump grant may be cut, anyone considering installing a heat pump may be wise to do this sooner rather than later.
