UK to regulate the heating oil market for the first time: what 1.5m homes get

On 13 October 2026 the government accepted the recommendations of the Competition and Markets Authority and said it will regulate the heating oil market for the first time. Around 1.5 million UK households heat their homes with oil because they have no mains gas connection. Until now they have had no price cap, no guaranteed route to independent dispute resolution and no special status for vulnerable customers — all of which grid customers already have.

What exactly has the government promised?

A dedicated regulatory regime for heating oil suppliers. In its response to the market study the government says it agrees "in principle" with the CMA's first recommendation and simply agrees with the other four. The regime is to include authorisation of distributors, identification of oil-heated households, priority services for vulnerable customers, a mandatory code of conduct with access to alternative dispute resolution (ADR), enforcement powers and a duty to monitor the market. Ofgem would run it in Great Britain, the Utility Regulator in Northern Ireland. The framework is Ofgem's new consumer-champion powers from the April 2026 Ofgem Review.

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No deadline appears anywhere in the document. The government says building the regime "will take time" and warns an overly burdensome framework could reduce the number of suppliers. Recommendations 1 to 5 apply to Great Britain only; in Northern Ireland heating oil sits with the Executive.

Will there be a price cap like the one on gas and electricity?

No. The CMA did not recommend price regulation and the government is not introducing it. The approach is targeted support, market monitoring and proportionate conduct rules instead. A Great Britain price checker modelled on Northern Ireland's CCNI tool was considered separately and marked "further work required"; the CMA notes transparency is lower in Scotland and falls everywhere during volatile periods.

What happened to prices in spring 2026?

The average retail price rose from 64p a litre in February to 104p in March, up 64% in a month, and peaked at 123p in April — 92% above February. For a typical 500-litre order that meant roughly £320 becoming £520, about £200 more, of which around £170 reflected higher wholesale costs. The CMA calculated that wholesale costs drove 83% of the March increase and supplier operating costs 6%; suppliers did not make material profits from the crisis. Prices fell 15% in May, back to 104p, but stayed above pre-conflict levels. By region in March: Scotland 69p to 113p, Wales 64p to 106p, England 65p to 103p, Northern Ireland 57p to 97p — the lowest, in the nation where over 60% of households use heating oil.

Who is owed compensation for a cancelled order?

Customers whose supplier cancelled an order already placed, at the peak of the price spike. The CMA counted around 1,700 customers affected by what may have been a breach of contract: they were refunded, but many had to rebuy far dearer and some went without fuel. The estimated overpayment is £150 to £350. Under the CMA's scheme some suppliers agreed to pay: those who bought replacement oil get the difference, those who did not will have the original order honoured at the agreed price. By 28 August around 800 people had been notified. Eligible customers are contacted directly, but a claim for a replacement purchase needs a receipt and a delivery note. The CMA is preparing court enforcement against suppliers refusing to pay voluntarily.

What changes before a regulator exists?

The industry Codes of Conduct. That is the second and fourth recommendation, and work is under way with UKIFDA, NIOF and consumer bodies. The codes are to require clear signposting of payment plans, of minimum order volumes and of the reasons behind them, plus a route to independent dispute resolution.

Is the 500-litre minimum order really being reviewed?

Yes, and the government agreed to it. One detail is worth knowing: no minimum order volume is prescribed in regulation at all. The limit comes from the approved operating range of each tanker's measuring equipment — below it a delivery cannot be measured accurately. The government will check whether industry rules restrict choice unnecessarily, especially when paying for 500 litres at once is out of reach.

What money is available right now?

Two routes. First, targeted support: over £50 million for low-income oil-heating households was announced in March 2026 (the 13 October release says £53 million), delivered in England through the Crisis and Resilience Fund. Second, the Boiler Upgrade Scheme: £7,500 for an air source or ground source heat pump, £5,000 for a biomass boiler in limited cases, £2,500 for an air-to-air heat pump, plus £1,500 extra where the property is heated by oil or LPG with no mains gas. Together that is £9,000, and the uplift runs until March 2027. One grant per property, no hybrid systems, England and Wales only. In August 2026, 1,042 voucher redemptions were at the £9,000 rate — 32% of that month's total — and July applications were 81% higher than a year earlier.

What should you do if a supplier breaks the contract?

Keep the paperwork. The CMA names the order confirmation, the receipt and the delivery note as the evidence a compensation claim needs. Then complain to the supplier in writing, citing its code of conduct: access to independent dispute resolution is what the government intends to strengthen first, ahead of full regulation. The CMA has separately written to LPG suppliers about their obligations, with no finding of infringement so far.