Publications
DECC FIT appeal dismissed
25 January 2012
DECC sets new FIT reference date of 3 March 2012
DECC on 19 January proposed a new ‘reference date’ of 3 March 2012 for the application of reduced Feed-in Tariff (FIT) rates for new solar PV installations.
Subject to Parliamentary process, electricity licence modifications will be brought into force by 3 March with the effect that all solar PV installations commissioned on or after 3 March will (from 1 April 2012) receive the lower FIT rates set out in DECC’s 31 October consultation document (21p/kWh for the smallest projects).
The outcome of the ongoing Judicial Review is not yet known so the FIT rates applicable to solar PV installations commissioned between 12 December 2011 and 3 March 2012 remain unclear. If DECC’s appeal against the High Court’s ruling is successful the Government may yet revert back to the original reference date of 12 December, in which case the lower FIT rates will (from 1 April 2012) apply to all solar PV installations commissioned on or after 12 December.
The DECC press release can be read in full here.
If you would like any further information please get in touch with your usual Osborne Clarke contact.
DECC FIT appeal dismissed
In a very brief hearing at 10am this morning [Wednesday 25 January 2012] the Court of Appeal dismissed DECC’s appeal against the High Court’s ruling in the Feed-in Tariff Judicial Review.
The bases of the judges’ decision to dismiss the appeal were (1) the retrospective effect of setting a reference date of 12 December 2011 and (2) the fact that the Secretary of State has no power under legislation to make retrospective changes to the Feed-in Tariff (FIT) scheme.
Therefore, DECC’s proposal that reduced FIT rates should apply (from 1 April 2012) to solar PV installations with an eligibility date on or after 12 December 2011 would be invalid, if implemented.
In his judgment, Lord Justice Moses said:
“An owner of an installation is entitled to payment at a rate fixed by reference to and from the year in which the installation became eligible. He is entitled to that fixed rate throughout the period of generation from the moment of commencement up to the maximum specified. On incurring capital expenditure in the purchase and installation of a solar PV [sic], an owner acquired, under the scheme, a right to a rate of return fixed for 25 years, subject to fluctuations of RPI. The proposed modification [the 12 December reference date] has retroactive effect. … it takes away that pre-existing right to 25 years of payments at 43.3p per kilowatt hour and substitutes for it a right to that sum only for a few months and thereafter at the lower rate proposed of 21p per kilowatt hour.”
“…it would be curious to contemplate a statutory provision which envisages a scheme for financial incentives to capital investment to encourage small-scale electricity generation in which the return could be varied once the capital expenditure had been incurred”.
“I conclude that there was no power contained within [relevant legislation] to introduce a modification which reduced a rate fixed by reference to an installation becoming eligible prior to the modification. To do so would be to take away an existing entitlement without statutory authority.”
The immediate implication of this judgment is that solar PV installations with eligibility dates falling before 3 March 2012 should be entitled to the current FIT rates (43.3p/kWh for ≤4kW installations) for their full 25 year eligibility period. Installations with eligibility dates falling on or after 3 March will receive the current rates until 31 March 2012 and the new rates (21p/kWh for ≤4kW installations) for the remainder of their 25 year eligibility period.
However, DECC may still seek leave to make a further appeal to the Supreme Court. If it opts to appeal, it must seek leave to do so within 28 days of today’s hearing. So the saga may yet continue…
STOP PRESS
DECC has now confirmed that it will seek leave to appeal to the Supreme Court.
Chris Huhne said: “The Court of Appeal has upheld the High Court ruling on FITs albeit on different grounds. We disagree and are seeking permission to appeal to the Supreme Court”.
As a consequence, the 3 March reference date will not necessarily take effect and installations with eligibility dates falling on or after 12 December 2011 may still be at risk of rate cuts from 1 April 2012.
If DECC is granted leave to appeal to the Supreme Court and is successful in its appeal, the 12 December reference date will likely apply and the 3 March reference date will become redundant. If DECC is refused leave to appeal (or if it is granted leave to appeal but the appeal is dismissed), the 3 March reference date will likely apply and the 12 December reference date will become redundant.
If you would like any further information please get in touch with your usual Osborne Clarke contact.
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