05/01/12 The Appeal Court finds FIT rate reduction illegal
Three Appeal Court judges have today upheld the finding of the High Court before Christmas. This is a very important finding - it means that the Government cannot retrospectively change FITs contracts.
It also means that the proposal to reduce tariff rates for systems fitted after 12 December 2012 is illegal. However, it does not affect the Government's proposal to cut rates for systems installed after 3rd March 2012, because that reduction has followed the correct procedure with regulations being tabled in Parliament already, and the cut coming after the 40 day period required by law.
There is still some uncertainty about rates paid on installations fitted between 12/12/2011 and 3/3/2012 because it is not yet clear whether the Government will appeal. However, the minimum tariff that people installing in this period will get is 21p, and if Government decides not to appeal (or if it eventually loses its appeals) then they would get the 43.3p rate*. There is speculation that Government will appeal to prolong the uncertainty in the hope it will put some consumers off - but no doubt DECC will be setting that against the political damage done to them by yet another defeat and the image of a Government refusing to accept it has got it wrong and working to make amends.
The process going forward is that Government has formally asked the Appeal Court for permission to take this matter to the Supreme Court. This however does not necessarily mean Ministers have decided it will do so - at the moment they may simply be keeping the option open. The Appeal Court judges will make a decision on whether to grant permission in the next few days - if it is granted, the case can go to the Supreme Court. If permission is refused the Government would still have the fall back option of applying to the Supreme Court itself for permission to appeal. But this would add a further step in the process - and at each step the chances of success for Ministers recede a little further.
It is going to be very important to ensure MPs and Ministers realise solar has a bright future in the UK if volumes are maintained and the industry continues to cut costs. Shrinking the industry would mean these cost reductions will take longer to achieve - making it longer before grid-parity is reached, when can and have a strong inustry standing alone. Errors made by the Department of Energy and Climate Change in operating FITs should not be paid for by the industry. And MPs and Ministers must remember that the "problem" with FITs has been caused by solar prices tumbling faster than anyone expected. Cheaper solar should never have become a "problem" requiring the industry to be scaled back, but an opportunity to increase the ambition for the industry.
*For <4kW systems - though the timing point applies to changes at other rates too.
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