Secretary of State for Energy and Climate Change v Friends of the Earth & Ors

A delegated power to establish and modify a financial-incentive scheme does not, without clear statutory language, authorise a retrospective reduction of a payment rate already fixed by the scheme. Where eligibility for a tariff fixes the rate payable throughout the eligibility period, subject only to an express index-linked adjustment, an owner acquires an existing entitlement to that rate.

A proposal to substitute a lower rate for installations already eligible therefore has retrospective effect. A public warning of the proposed change cannot enlarge the statutory power. General powers concerning payment calculation, formulaic annual reductions, and reduced payments in specified circumstances do not clearly authorise that result.

The Secretary of State consulted on reducing the generation tariff for small solar photovoltaic installations. The proposal would apply a lower tariff from 1 April 2012 to installations which became eligible between 12 December 2011 and that date.

Mitting J declared the proposal unlawful. The Secretary of State appealed. The appeal concerned only whether the power in Energy Act 2008 section 41 authorised a modification reducing the tariff for installations which had become eligible before the modification came into force.

1. Appeal dismissed. Moses LJ, with whom Richards and Lloyd LJJ agreed, held that the proposed modification was outside the power conferred by section 41 of the Energy Act 2008.
2. The Feed-in Tariff scheme fixed the generation tariff by the installation’s eligibility date and FIT year. The rate was payable for the eligibility period, up to 25 years for the relevant solar installations, with adjustment only for movements in the Retail Price Index. It was not a rate to be redetermined from time to time by the Secretary of State.
3. Reducing the rate for an installation which had become eligible before the modification took effect would therefore alter an existing entitlement. It had retrospective effect, although it was more closely analogous to a prospective alteration of an existing right than to a change in the law governing completed past events.
4. There is a presumption against construing a statutory delegation as authorising such an alteration without clear language. Section 41 permitted arrangements for payments, their calculation, formulaic annual decreases, and reduced or withheld payments in stated circumstances. Those provisions did not clearly confer a general power to reduce a rate already fixed by the scheme after the capital investment had been made.
5. The consultation warning could not change the nature or scope of the statutory power. The court did not uphold Mitting J’s separate reasoning that the reference date was not calculated to further the statutory purpose. The decisive question was vires, and section 41 supplied no authority for the retrospective reduction.

• Court of Appeal (Civil Division): In [2012] EWCA Civ 28, permission to appeal was granted but the Secretary of State’s appeal was dismissed.
• High Court, Queen’s Bench Division, Administrative Court: Mitting J declared unlawful the proposal to apply the April 2012 tariff modification to installations becoming eligible on or after 12 December 2011.