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United Kingdom

Secretary of State for Energy & Climate Change v. Friends of the Earth & Others

Jurisdiction: United Kingdom

Side A: Secretary of State for Energy and Climate Change (Government)

Side B: Friends of the Earth & Ors. (Ngo)

Core objectives: The Secretary of State appealed a parlimentary decision that a proposed modification to a law conducted was unlawful.

In April 2010, the secretary of state for energy and climate change introduced a scheme to encourage the installation of generators for small-scale, low-carbon electricity generation (the scheme), including solar panels. The scheme required licensed electricity suppliers to pay a sum of money per kilowatt-hour of electricity generated by such systems to the installer (the feed-in tariff). The original feed-in tariff was to be fixed for 25 years, subject to the Retail Prices Index (RPI). The scheme was established and came into effect pursuant to the Feed-in Tariffs (Specified Maximum Capacity and Functions Order) 2010, SI 2010/678 and by amendments to the standard licence conditions issued to electricity suppliers. The procedure for making modifications to the licence conditions in relation to the scheme was contained in section 42 of the Energy Act 2008. In October 2011, the secretary of state issued a consultation paper. The consultation period was due to expire on 23 December. The consultation paper proposed a reduction in the feed-in tariff payable for electricity generated by small solar systems. The proposed new tariffs were to come into force from 1 April 2012 (the reference date). The new tariff was also to apply to installations installed and certified on or before 12 December 2011. Therefore those installations would only receive the current tariff until 1 April 2012. The secretary of state's assessment of impact showed a potential reduction in uptake of small solar systems of 70% between 12 December 2011 and 1 April 2012. The claimants applied for judicial review of the proposal. The judge found that the scheme did not evince an intention on behalf of parliament to allow the secretary of state to make the proposed modification, and held that that modification was therefore unlawful. The secretary of state appealed. The issue was whether the judge had erred. Consideration was given to section 41 of the 2008 act. The appeal would be dismissed. The concept of a rate of payment fixed during the period of generation by reference to the date the installation became eligible for payment had been fundamental to the scheme. It had provided an assurance as to the rate of return to an owner who paid a capital sum before the installation coming into operation, subject to an adjustment in accordance with the RPI. That the scheme had provided for a fixed rate of return during the period of generation was a critical consideration. The structure of the scheme had fixed the rate by reference to the year the installation had became eligible for payment. It had not provided for a rate which might fluctuate according to the yearly decisions of the secretary of state, irrespective of the year when the installation became eligible. It was not possible to recognise in the standard licence conditions or elsewhere a scheme in which the tariffs might have varied, without regard to the date when the installation became eligible and without any indication within the scheme of what amount the owner of the installation might have received, or as to how it had to be calculated. The scheme had provided for a predetermined rate, not such rate as from time to time might have been determined. In those circumstances, a modification of the feed-in tariff payment rate, in respect of installations which had become eligible before the modification, would have a retrospective effect. Because the scheme had fixed a rate by reference to the year the installation had become eligible, reduction of that rate (apart from fluctuations in the RPI) would have had a retrospective effect. Therefore, such legislation would only have been valid if the empowering provision contained in section 41 of the 2008 act had authorised such an effect. However, on a proper construction, section 41 of the 2008 act contained no power to introduce a modification which reduced a fixed rate by reference to an installation becoming eligible before the modification. Accordingly, the secretary of state had had no power to make that modification.
Case documents

from the Grantham Research Institute
from the Grantham Research Institute
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