1 Domestic Heating Oil Consumers – Fact Sheet July 2016 1. Introduction
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Domestic Heating Oil Consumers – Fact Sheet July 2016 1. Introduction About 37% of households in Dorset do not have access to a main gas supply (see table below). Research shows us that there is a proven link between being ‘off-gas’ and in fuel poverty1. Local Authority % non-gas properties West Dorset 50.7% North Dorset 47.2% Bournemouth 45.9% Purbeck 37.7% Weymouth & Portland 29.3% Poole 27.3% Christchurch 25.8% East Dorset 25.2% New Forest 26.2% South Somerset 48.2% Taunton Deane 34.4% For households without access to mains gas, the main options for heating are traditional central heating systems using oil, LPG or electric storage heaters, or renewable heating systems such as heat pumps and biomass boilers. Some households also rely on solid fuel systems. 2. How oil-fired heating works Heating oil is normally used in a ‘wet’ heating system where an oil-fired boiler heats water, thus providing heating and hot water. Oil fired boilers can be heat only or a combination condensing system. Oil fired combination boilers usually have an internal hot water store to supply domestic hot water rather than the instantaneous heating more common in gas boilers. Modern oil-fired condensing boilers are efficient and long-lasting with flexible controls. 3. Domestic oil tanks There are three types of storage tank for domestic use: 1 ‘Making Energy Better: an investigation into the energy challenges faced by rural communities in Dorset’, Purbeck Citizens Advice, July 2016 1 single skin (which may be installed in a reinforced concrete or masonry bund*) double skin (predominantly commercial underground applications) integrally bunded* (above ground and within buildings) *A bund is a secondary containment system designed to prevent fuel lost from the tank escaping into the environment. A typical domestic oil storage tank will have a capacity of up to 3500 litres and can be made from plastic or steel. All heating oil tanks should have a gauge in one form or another to indicate how much oil is left in the tank. Prices of kerosene vary significantly (between 26p per litre including VAT in January 2016 up to 35p per litre including VAT in July 2016). At a price of 32p per litre plus 5% VAT, consumers will pay £1,176 to fill their tank. Tanks must be located in a place that complies with fire separation distances in order to minimise the risk of fire. Oil storage tank installations must comply with regional building regulations – it is recommended that installation and servicing is carried out by an OFTEC registered technician (see below). It is essential to ensure that the tank has a stable base and supports in order to make them safe and protect from leakage. Tanks and pipes should be regularly serviced and filters replaced. 4. Buying domestic oil Oil has typically been a very expensive way to heat a home. However, in recent years, the price of oil has been falling and the latest figures show that domestic heating oil is currently the cheapest fuel for home heating (May 2016). However, an oil-fired boiler is typically more expensive than an equivalent gas boiler so oil fired central heating remains relatively uncommon. There are two main types of domestic heating oil: gas oil and kerosene. Gas oil (known also as red diesel) is used in agriculture and older boilers. Kerosene is more commonly used because it is cleaner and more efficient. It is also possible to pay for premium kerosene or add additives to standard kerosene in order to get a cleaner burn and high efficiency. For certain appliances, such as an Aga, additives are required – the manufacturer’s instructions will specify these. For most domestic customers, oil will need to be purchased in bulk and stored in an external storage tank. Customers need to be aware that oil prices vary significantly and it is often cheaper to buy their oil in the summer. Some suppliers can offer an automatic top-up of oil-tanks – they will deliver and refill customer’s tanks at set intervals, estimating usage and varying the deliveries depending on the weather – this ensures that the customer never runs out of oil but also ties in a customer to a specific supplier. 2 There are a number of domestic oil comparison websites, none of which have been formally endorsed by Citizens Advice. The main ones are: Boilerjuice – www.boilerjuice.com 100 suppliers CheapestOil - www.cheapestoil.co.uk 50 suppliers Fueltool - www.fueltool.uk Won't disclose Heating Oil Shop - www.heatingoil.co.uk 236 suppliers Oil Clubs Oil clubs are groups of people who order their domestic oil together in order to benefit from lower prices. They are often formed in rural areas where households are ‘off-gas’. They are also known as oil-syndicates, oil buying groups or oil-co-operatives. Oil clubs vary in size from small neighbourhood groups to county-wide syndicates. Clients benefit in a number of ways: - Reduction in unit price – buying in bulk reduces the delivery price for fuel suppliers - Reduction in traffic from oil tankers through their village – one journey to deliver to a number of houses is better than individual deliveries - Community inclusion – buying together enhances a sense of community In general, there is no commitment for oil club members, individuals are still free to purchase oil outside of the oil club. Community Oil Clubs Community oil clubs are groups of people who combine their orders for oil. These clubs are often co-ordinated by one person who volunteers to undertake the administration, ordering the fuel and arranging deliveries. There are at least 6 individual Oil Clubs operating in Dorset (shown in Appendix A) which offer discounted prices for deliveries on specific dates. The national Oil-Club’ – www.oil-club.co.uk The Oil-Club is a commercial operation which provides a bulk-buying service across local oil- buying groups. The operator of each group is paid a commission (about 1.5p – 2p per litre) for organising the orders and arranging deliveries. There are over 70 ‘clubs’ in Dorset that are part of the national syndicate (see Appendix B). ‘The Oil-Club is an independent organisation. We have no links to any of our suppliers. Our aim is simple – reduce the cost on our wallets and the environment as much as we can. Plus membership is free! The Oil-Club has been running for 5 years. We discreetly manage over 5 million litres of orders per month for our members. We are an internet only organisation in the effort to keep costs low’ (extract from www.oil-club.co.uk). 3 5. Regulation and Trade Associations There is very little and regulation covering the supply of domestic heating oil (compared to gas and electricity supply) and no legal requirement for domestic oil suppliers to belong to a trade association. OFTEC The Oil Firing Technical Association (OFTEC) is the trade association covering the domestic oil heating and cooking industry. It sets standards for tradesmen and for consumers and provides information and advice for anyone who uses heating equipment and is off the mains gas network. OFTEC run a registration service – keeping a register of domestic oil engineers and technicians under the ‘competent persons scheme’. To become OFTEC registered, all technicians must undertake an approved training course and assessment. They are also inspected regularly by OFTEC to ensure their work meets the required standard. Federation of Oil Suppliers (FPS) The FPS Limited is the Trade Association for the oil distribution industry and ancillary interests in the UK and the Republic of Ireland. It provides members with a collective voice for the industry at national level, services to assist members in optimising their business efficiencies and promotes best practice in the industry. All FPS members must adhere to their code of practice http://www.fpsonline.co.uk/code-of- practice , summarised in their Customer Charter (see Appendix C). Complaints If a fuel supplier is a member of FPS, a client should, in the first instance, contact the distributor with their complaint. Most complaints will be quickly and efficiently dealt with by your distributor. There will be no charge for this unless it requires the services of a competent third party such as a testing laboratory. Should your complaint not be dealt with, then you can make a complaint to the FPS. There will be no charge for the FPS to investigate your complaint. If the complaint is still not resolved, a client can take their case to the FPS Ombudsman for a decision. There is a charge for this and both the client and the distributor will be required to pay the full fee in advance. 4 6. Issues to be aware of a. Domestic oil consumers need to buy their fuel in bulk which makes it difficult to budget and can lead to debt. Consumers could use comparison sites to find cheaper oil, or join a collective oil-buying scheme such as an oil club. Some fuel suppliers offer a monthly payment plan. Credit Unions offer loans to cover the initial purchase of fuel. b. Customers need to be aware that oil prices vary significantly and it is often cheaper to buy their oil in the summer. c. Customers who buy their oil from a supplier who is a member of FPS or a similar trade association benefit from the FPS consumer code of conduct and can use FPS to investigate a complaint. d. Oil tanks should be inspected annually as part of the heating system’s regular service plan. Oil tanks, like all heating products, have an expected working life (typically 20 years).