OFT rules out heating oil price regulation

Four million households currently rely on 'off-grid' energy such as heating oil, liquid petroleum gas (LPG) and, more recently, renewable energy sources like solar panels (see our Cheap Heating Oil guide for tips on cutting costs).

Key Points

• Off-grid energy market doesn't need price regulation says OFT

• OFT says consumers have good choice of suppliers

• Price increases due to rising crude oil prices

The OFT says competition is working well, with consumers offered a good choice of suppliers. Therefore, the watchdog has decided against price regulation for the sector.

However, some heating oil and other off-grid fuel suppliers are still under investigation amid fears they may not be treating their customers fairly.

Following concerns over increasing prices, the OFT launched its off-grid market study in March this year.

As part of that probe, it took action against some heating oil companies to prevent consumers being misled when searching online for heating oil supplies (see the OFT hits back against heating oil rogues news story).

What the OFT found

It found the main reason for price increases was due to the rising price of crude oil and a surge in demand last winter at the same time as deliveries were hampered by the severe weather.

It also found 97% of houses in an off-grid area were served by at least four suppliers.

Further investigation

The OFT is not finished. It will also look at the following issues:

• The OFT received complaints some suppliers are charging a different price on delivery from that quoted when the order is taken.

• During the study it received complaints that people may be locked into expensive LPG contracts following an initial introductory rate. It is working with the industry to resolve this matter.

• There were also some concerns surrounding the potential for mis-selling of solar panels, which the OFT will investigate.

Clive Maxwell, executive director of the OFT, says: "We looked at both competition and consumer issues as part of this comprehensive study, and whilst there seems to be a good choice of suppliers across most of the country, we have real concerns whether consumer protection law is being complied with in all cases."