RWE Generation UK Plc v Gas and Electricity Markets Authority & Ors

A charging methodology may differentiate between classes of electricity generators where they are not in comparable positions, or where a material and relevant difference objectively justifies different treatment. The Directive does not require transmission charges to reflect only the total costs of the transmission owner. It permits a methodology relating charges to the different impacts of users on transmission investment, provided the regulatory objectives are met. A regulator may address infrastructure investment costs separately from other system costs, and may align charging with lawful transmission-planning criteria. Judicial review does not require the court to resolve complex technical evidence where the decision rests on an unchallenged planning framework. A charging methodology of this kind does not confer an advantage and is not state aid.

RWE Generation UK Plc sought judicial review of the Authority’s decision of 25 July 2014 approving WACM 2, a modification to electricity transmission network use-of-system charges. The modification introduced a Peak Security Tariff payable by conventional generators and a Year Round Tariff payable by all generators.

RWE alleged unlawful discrimination under Directive 2009/72/EC, misinterpretation of the Directive, failure to consider other transmission charges and intermittent generation’s contribution at peak times, irrationality and disproportionality. It also alleged that the modification constituted state aid requiring notification under Article 108(3) TFEU, and sought to raise a further challenge concerning re-notification of a renewables obligations scheme.

1. Claim dismissed. The Authority’s approval of WACM 2 was lawful.
2. The principle of non-discrimination requires comparable situations not to be treated differently, or different situations to be treated alike, without objective justification. The issue may be analysed either by asking whether the situations are comparable and, if so, whether the difference is justified, or by asking whether there is a material and relevant difference sufficient to justify the treatment. The court adopted the approach discussed in R (Rotherham Metropolitan Borough Council) v Secretary of State for Business, Innovation and Skills [2015] PTSR 322.
3. Conventional and intermittent generators were materially different for the purposes of the Peak Security Tariff. Under the unchallenged SQSS planning criteria, intermittent generators could not be relied upon to generate at any particular time, including at peak demand. It was therefore lawful to recover investment costs associated with demand security from conventional generators alone.
4. The Directive did not require cost-reflectivity to mean only that total charges must not exceed the transmission owners’ overall costs. A methodology relating charges to the impact of different classes of users on transmission investment was compatible with the Directive and with the promotion of cost-effective, efficient and competitive systems.
5. The Authority was entitled to consider TNUoS infrastructure-investment costs separately from BSUoS costs arising from constraints and payments to generators. It was also entitled to rely on the SQSS rather than resolve disputed technical evidence about the actual contribution of intermittent generation at peak times. The decision rationally aligned the charging methodology with the investment criteria and involved no failure to consider relevant matters.
6. The modification did not confer an advantage on any generator or class of generators and therefore did not constitute state aid under Article 107 TFEU. The proposed challenge seeking re-notification of the renewables obligations scheme was outside the claim and could not fairly be determined without evidence about that scheme.

First-instance judicial review claim. The judgment does not state any prior appellate decision.