Utilita Energy Ltd, R (On the Application Of) v Secretary of State for Business, Energy And Industrial Strategy

The claimant, an energy supplier using Secure SMETS1 meters, sought judicial review of three government decisions concerning the smart meter roll-out: (1) amendment of standard licence conditions requiring suppliers to take all reasonable steps to enrol eligible SMETS1 meters with the Data Communications Company (DCC) within 12 months and to replace any unenrolled SMETS1 meters with SMETS2 meters by 31 December 2020 (the First Decision); (2) fixing a pre-payment SMETS1 end-date of 15 March 2019 so installations after that date do not count towards suppliers' roll-out duty (the Second Decision); and (3) a direction that the DCC provide SMETS1 services for the Secure cohort, enabling enrolment (the Third Decision).

The court rejected challenges that the First Decision was irrational or unlawfully inconsistent, that consultation was inadequate, or that environmental impacts were ignored. The court held the decision-making sequence (consulting first on enrolment for cohorts where sufficient information existed and later on Secure) was a lawful policy choice. The tribunal also found no arguable breach of the public sector equality duty (section 149 Equality Act 2010) or of duties in sections 4AA Gas Act 1986 and 3A Electricity Act 1989, given that those matters were considered contemporaneously and subsequently in the ministerial submissions and consultation responses. The cost–benefit analysis and the inclusion of savings from avoiding replacement of Secure meters were lawful, and there was no appearance of predetermination. Because the Third Decision made enrolment possible, the claimant abandoned an Article 1 of Protocol 1 property challenge as unnecessary. The claim was dismissed and permission to challenge the Third Decision was refused.

Background and parties. Utilita Energy Limited (the claimant), an energy supplier with a large prepayment customer base using Secure SMETS1 meters, sought judicial review of three government decisions implementing policy for an interoperable smart meter roll-out. The defendant was the Secretary of State for Business, Energy and Industrial Strategy. Proceedings were before Lewis J., following earlier permission steps by Walker J. The hearing took place on 23–25 July 2019.

Nature of application and relief sought. The claimant sought to quash or obtain declarations against: (i) the licence modification requiring enrolment of eligible SMETS1 meters within 12 months and replacement of unenrolled SMETS1 meters by 31 December 2020 (First Decision); (ii) the setting of a SMETS1 prepayment end-date of 15 March 2019 (Second Decision); and (iii) the direction requiring the DCC to provide services for Secure SMETS1 meters (Third Decision) (the latter by re-amendment/application for permission).

Issues framed. The court identified and decided multiple issues: (a) whether the First Decision was irrational or unlawfully inconsistent in treating Secure meters the same as cohorts already subject to DCC enrolment; (b) whether consultation was inadequate; (c) whether environmental impacts were not assessed; (d) whether the First, Second or Third Decisions breached the public sector equality duty (section 149 Equality Act 2010) or duties under sections 4AA Gas Act 1986 and 3A Electricity Act 1989; (e) whether the Third Decision’s cost–benefit analysis wrongly counted savings from avoiding replacement or omitted core DCC costs; (f) whether the consultation on the Third Decision was predetermined; and (g) whether there was an A1P1/common law property interference.

Court’s reasoning and conclusions. The court held the government’s sequencing—consulting and deciding on cohorts where sufficient information existed while reserving Secure and EDMI for later consultation—was a lawful policy and not irrational or discriminatory. The consultation documents sufficiently signalled the replacement backstop would apply to unenrolled SMETS1 meters generally. The court accepted the government had regard to environmental impacts in policy terms and, in any event, refused relief on environmental grounds because the Third Decision enabled enrolment and avoided mass replacements. On equality and statutory duties, the court found contemporaneous ministerial submissions and the consultation response engaged with equality and consumer impacts, so no arguable breach of section 149, sections 4AA or 3A. On the Third Decision, the cost–benefit approach (counting avoided replacement savings and excluding core DCC costs already attributed to an earlier decision) was a lawful economic and policy choice; exclusion of those savings would still have left a positive net benefit, and inclusion of core DCC costs was not legally required. There was no appearance of predetermination. Given the Third Decision enabled enrolment, the A1P1/common law property challenge was unnecessary. The court dismissed the claim and refused permission to challenge the Third Decision.

The claim for judicial review of the First and Second Decisions is dismissed. The court held that the defendant’s decisions were lawful: the sequencing and content of consultations and the imposition of a backstop replacement obligation were lawful policy choices, environmental and equality considerations were sufficiently addressed, and the cost–benefit and technical/security assessments underpinning the direction to the DCC were lawful. Permission to challenge the Third Decision was refused because there were no arguable grounds of unlawfulness.

Permission to challenge the First and Second Decisions was granted by Walker J.; by order dated 3 May 2019 Walker J. directed that the claimant's application to re-amend to challenge the Third Decision be determined at the substantive hearing. The substantive judicial review was heard by Lewis J. on 23–25 July 2019, and the judgment was handed down on 7 October 2019 ([2019] EWHC 2612 (Admin)).