A consumer guide to oil fuel costs, suppliers and payment plans
Fuel costs and payment plans for oil central heating
The price of oil fluctuates but tends to sit around at around 5.5p per kWh or 50p per litre. The oil supply market has been much modernised in recent years following a series of attempts by the UK Government to improve the standard of service provided to domestic oil customers. Oil, like LPG, is not regulated by Ofgem and oil customers can experience a patchy service in terms of customer care and transparent pricing. Suppliers have responded with the introduction of oil buying groups, monthly payment plans and automatic top up deliveries. Some have signed up to a Customer Charter and Code of Practice. We guide you here.
1.1 million people in the UK use oil to heat their homes and the majority of customers have access to at least four fuel suppliers. Many suppliers have improved their services with the introduction of apps that detect when you are running low and payments plans to spread the cost of fuel bills.
Protection for consumers
In the absence of a government consumer protection scheme for oil customers, some suppliers have signed up to voluntary bodies such as the UK and Ireland Fuel Distributors Association that encourage their members to work to 1) Customer Charter and 2) Code of Practice for supplying liquid fuels for domestic heating. More details below.
Problems with oil supply services
Following extensive research into the domestic heating oil supply market, the UK Government found that intervention was required to improve the standard of service to oil consumers. The primary areas of concern were:
- Unlike gas and electricity, off-grid households have no access to an ombudsman or dispute resolution when they are genuinely aggrieved.
- Customers are often rewarded for loyalty and this disadvantages those that shop around for the best price.
- Suppliers are responsible for setting prices and are open to negotiation with individual customers.
- Fuel poverty rates are higher for off-grid customers than they are for mains gas households. However there is no fuel protection for consumers in debt or suffering financial difficulty.
- Nor is there a ‘supplier of last resort’. Suppliers are under no obligation to ensure security of supply (as mains gas and electricity suppliers are) nor are they obliged to prioritise vulnerable customers. In debt consumers who are unable to heat their homes during cold weather are exposed to serious health risks.
Initiating improvements to oil supply services
Whilst the Government has not gone so far as to bring oil suppliers into the remit of consumer protection body Ofgem, it has instigated a number of initiatives to improve standards amongst suppliers via self-regulation:
- The development of the self-regulatory Code of Practice for suppliers and a Customer Charter for consumers (see below for what you can expect from member companies)
- Raising awareness of cold weather preparation with the Buy Oil Early campaign
- Used existing industry and social sector bodies to promote oil buying groups to bring down the cost for consumers.
- Standardising the definition of a vulnerable customers to help suppliers prioritise their deliveries during extended periods of bad weather and developing the Cold Weather Priority scheme in association with trade bodies to identify heating oil customers over 75
Buying options: monthly payments, top up plans and buying groups
A number of fuel suppliers have developed payment and delivery plans to better meet the needs of customers, keep prices down and ensure they never run out.
Unlike LPG suppliers, there is no minimum contract term for paying monthly for your oil. However you will need to either:
- Start paying monthly before you need to request a delivery, so that a sufficient level of credit has built up on the account to pay for the oil. NB it is wise to start monthly payments when you still have some oil in the tank or during the summer month to allow time for credit to build up.
- pay 50% -100% of your first delivery upfront If you need to order oil before starting monthly payments, or shortly after.
Planned top up deliveries
Another development in the industry is planned top up deliveries. These are either scheduled in advance based on historic consumption or in response to automatic monitoring of your oil levels.
Automatic monitoring devices are a new development and will alert your supplier when you are running low and automatically schedules a top up delivery. This allows suppliers to group deliveries together and keep costs down.
National supplier Certas Energy have pioneered their own smart monitor with Kingspan which uses the property’s wifi signal to send daily updates back to the supplier via device fitted to the tank.
When oil levels hit 30% Certas will automatically send out another delivery. In bad weather the trigger point can be raised to 40% to make sure you are not left waiting for fuel. Installation costs are £120 (although at the time of writing were £60) plus £5 per month monitoring fee for a minimum two-year contract period.
The device remains under warranty over the contract period. Alternatively many oil users have a Watchman fitted. This device is also fitted to the oil tank and sends alerts via radio signal to a digital display in the house. Customers are alerted when oil levels dip below a set point and know to order another supply.
Some villages and some suppliers have set up their own buying groups so that communities can come together to negotiate lower oil prices based on bulk deliveries.
Loyal buying groups keep all the perks of priority deliveries from their regular supplier. Buying groups that tend to go with the price is the lowest may not receive the same priority treatment at peak times as suppliers tend to deliver to their regular customers first.
Oil supply prices
Prices vary through the year according to demand, international conflicts, exchange rates and crude oil prices. Over the last 12 months prices have ranged between 48p per litre and 55p per litre. Loyal customers may be able to negotiate better rates, particularly if they commit to monthly payment plans. Prices are also markedly cheaper if you order in well advance.
Customer Charter and Code of Conduct for UKIFDA members
UK and Ireland Fuel Distribution Association (UKIFDA) is the trade association for the liquid fuels distribution industry. Amongst other roles, the UKIFDA provides a voluntary regulatory service that requires their members to sign up to a Code of Practice and Customer Charter. These documents seek to improve the profile of the oil supply sector by formalising good practice and delivering high standards of service to domestic oil customers. A summary of their commitments are as follows:
- Provide a service consistent with fairness, integrity and best practice
- Take special care in dealings with customers who are vulnerable due to age, disability or economic circumstances
- Provide accurate information to their customers around their products and services
- Provide annual statements to customers on monthly payment plans
- Assist customers unable to meet payment deadlines with alternative payment arrangements they can adhere to. Court action must be a last resort.
- Provide minimum levels of information for contracted deliveries including timescales, price and payment commitments.
- Resolve complaints quickly via an in-house complaints procedure; ideally published on their websites. Complaints must be dealt with in a 30-day period. Unresolved complaints can be referred to the UKIFDA.
The customer charter sets out in more basic terms these commitments and also provides guidance on managing oil supplies and suppliers effectively. Both can be accessed at https://www.fpsonline.co.uk