Havant Biogas Ltd & Ors v The Gas And Electricity Markets Authority

Under the Renewable Heat Incentive scheme, a regulator must apply the legally correct registration criteria and its own applicable guidance. Under the 2011 Regulations, a two-phase biomethane project was permissible. Future Stage 2 or Stage 3 producers, locations, equipment and third-party contracts were not legal preconditions to registration, although they could be relevant to Ofgem’s evaluative judgment. “Properly made” had a functional meaning: the information required by the Regulations and guidance had to be supplied to a sufficient standard to enable determination of the application. Ofgem had to ask the correct substantive and informational questions and could not treat non-preconditions as mandatory requirements. Its decision was unlawful because it did so, failed to engage with relevant guidance and gave inadequate reasons for inferring future non-compliance from the absence of current contracts.

Four special purpose vehicle companies applied in May 2018 to Ofgem for registration as producers of biomethane for injection under the Renewable Heat Incentive scheme. Their applications used a two-phase model: prior biomethane injection demonstrated commencement activity, while future production facilities and arrangements would be developed after registration.

The applications were refused. A statutory review officer concluded that the applications were not properly made, that the 2018 Regulations applied, and that the applicants could not demonstrate compliance with ongoing obligations concerning access and information. The claimants sought judicial review on five grounds, concerning the applicable Regulations, registration requirements, legitimate expectation, legal irrelevancies and prior involvement of the review officer.

1. Ground 5 failed. The statutory review officer had not been involved in the substantive merits of the earlier decisions. Routine communications, management updates and later requests for information did not deprive her of the required independent perspective. R (Farmiloe) v Secretary of State for Business Energy and Industrial Strategy was materially different.
2. Ground 3 failed. Earlier registrations did not create a clear and unambiguous representation that future applications would be granted on equivalent information. They were, however, a relevant reference point and potential body of experience. The legitimate expectation was limited to consideration under a legally correct and procedurally fair approach.
3. Ground 1 succeeded only in identifying an error which was immaterial independently. Under regulation 92(3)(a) of the Renewable Heat Incentive Scheme Regulations 2018, the tariff start date had to be assessed under the 2011 Regulations. The SRO therefore misdirected herself by applying the new definition of “properly made”. The error did not independently justify relief because the substantive issues had to be assessed under the 2011 Regulations in any event.
4. “Properly made” had a functional meaning. The required information had to be supplied to a sufficient standard to enable Ofgem to determine the application by applying the relevant refusal criteria. It was not a freestanding formality or a vehicle for requiring a holding application to secure an earlier tariff date.
5. Under the 2011 Regulations, the two-phase model was lawful. Commencement activity could be a prior or one-off injection activity. Future Stage 2 and Stage 3 facilities, locations, equipment, producers and contracts were not preconditions. Continuity was required as to the applicant as producer and the Stage 4 injection arrangements.
6. Ground 2 succeeded. The SRO treated the absence of identified future Stage 2 producers, definite Stage 2 and 3 processes, binding future contracts and specified locations as mandatory requirements. She failed to recognise that these were not preconditions, failed to engage with Ofgem’s guidance, and treated the absence of current contracts as sufficient evidence of future non-compliance without a reasoned basis. The same defects affected the access and information issues.
7. Ground 4 failed. The alleged unspoken policy, budgetary and viability concerns were not established. The identified matters could in principle be relevant considerations, provided they were used within the correct legal framework.
8. The four decisions of 22 October 2019 were quashed. The applications were remitted to Ofgem for reconsideration and decision in accordance with the judgment, with a decision required within 28 days.

The judgment was a first-instance judicial review of Ofgem’s statutory review decisions dated 22 October 2019. The court granted permission on all five grounds, rejected Grounds 1 and 3–5 in substance, allowed Ground 2, quashed the four decisions and remitted the applications to Ofgem for reconsideration.