The solar power subsidies case : when can you judicially review a proposal?

29 December 2011 by

R (on the application of (1) Homesun Holdings (2) Solar Century Holdings (3) Friends of the Earth) v Secretary of State for Energy and Climate Change 

Admin. Ct, Mitting J, 21 December 2011, extempore judgment, so no transcript available

This successful challenge to a proposal to modify subsidies for solar power arose out of the decision by the climate change Department to amend the rules under which the subsidies were to be payable. The essential questions were whether DECC could do this whilst a statutory consultation period was running, and further whether judicial review lay against a proposal to change the system, as distinct from a challenge to the change itself.

The system of subsidies was administered via feed-in tariffs payable for electricity generated by solar panels. DECC introduced a scheme for small solar panel systems requiring licensed electricity suppliers to pay money to house owners for every kilowatt hour of electricity generated. DECC could modify the conditions of electricity licences granted by OFGEM, the electricity regulator, but was required, before making such a modification, to allow a consultation period in accordance with section 42 of the Energy Act 2008.

The proposal at issue in the case was to reduce the feed-in tariff payable under the existing scheme with the intention that the modifications would take effect prior to the expiry of the consultation end-date. The claimants also said that the proposal was to effect a modification to the feed-in tariff retrospectively, which would have a significant impact on the market.

Mitting J allowed the challenge to the proposal. Parliament could do what it wanted when enacting primary legislation, but where it was intended to give effect to a proposal by a statutory resolution or other similar procedure, the lawfulness of the proposal could be subject to judicial review, especially where, as here, the proposal had a significant impact on the market.  In construing the legislation it was doubtful whether DECC had a power to amend the feed-in tariff. OFGEM had been given the power to modify standard conditions, including those relating to feed-in tariffs, which was subject to a veto by DECC, not directions. There was a strong argument that Parliament had intended that, once the feed-in tariff scheme had been established, it was for OFGEM, not DECC, to make changes. Finally, on the assumption that DECC did have such a power, there was a strong presumption against retrospective legislation which might be overridden by express language or clear Parliamentary intention. In this case, Parliament had expressly provided in s.42 that DECC had to consult before making a modification. The whole tenor of the scheme was prospective, and in circumstances where the proposal had an adverse impact, such modifications could not be made before consultation. Therefore the proposal was unlawful and if, following it, such a modification were to be made, it would be unlawful.

As with a number of cases delivered just before Christmas, this judgment was delivered extempore  (just imagine the judge’s in-tray after the break if he did anything else), hence we cannot analyse anything other than a summary in this post. But it is a case to look out for when it is fully reported, on the main legal ground of importance – just when can you challenge a proposal. The courts have to draw a line between being too trigger-happy with governmental proposals before they have crystallised into a definitive decision, and being too deferential to an obviously unlawful governmental plan of action where efficient administration actually requires intervention from the courts before interested parties’ economic and other interests have been deleteriously affected.

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  1. Mike says:

    Hi David Hart QC I like your blog

  2. Tim Willis says:

    In view of the losses sufferd by those who have stopped projects as a result of the flawed announcement is there any prospect of compensation for expenditure incurred or loss of feed in tarrif income if projects cannot now be concluded by whatever date becomes the cut -off ?

    Damages in this context are always less than straightforward but would Article 1 of the HRA apply in the context of legitimate expecation ?

  3. Tiff says:

    Thanks, this is wonderful stuff!

  4. You would have thought that the government would have been trying to encourage people to go solar with their (alleged) green policies and with people needing to save money – but then again, it is (in all but name) a Tory government after all.

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