Companies claiming £132 million in damages from the Department of Energy and Climate Change have rejected the department’s claim that the changes to the feed-in tariff scheme it enacted in 2011 would have saved customers from a £50 a year bill rise by 2020.
The claimants believe that the figure quoted by DECC is highly misleading. The group points to the department’s own impact assessment it released at the time of the cuts.
The impact assessment document outlined three scenarios: 1) A ‘do nothing’ base case, 2) FiT cut with the 12 December 2011 reference date; or 3) Cut on the 1 April 2012, as per the original published plan.
The document states that the proposed impact on an average domestic bill, in 2010 prices, for option two would have been £3.20. For option three it was listed as £4.20. As a result, the group claims that DECC’s own analysis shows that the difference between implementing a cut on 12 December and not later on the 1 April was £1. Adjusting for inflation (3.5% per annum) to give a 2020 price, the figure goes up to £1.41.
However, speaking to Solar Power Portal, DECC responded robustly with a spokesperson stating that the £50 figure is “far from inflated”. The spokesperson explained: “The £50 saving on consumer bills as a result of the changes to the scheme is based on calculations which deduct the expected impact on consumer bills under the reformed FiTs scheme of £9, from an estimated £61 impact if no intervention had been taken until 2020”.
The main advocacy group opposing the cuts in 2011 was called Cut Don’t Kill, and agreed that DECC had to cut the FiT rate. Therefore, DECC’s baseline based on the ‘do nothing’ scenario could be seen as disingenuous and not representative.
A spokesperson for Prospect Law said: “It is disappointing to see DECC stating that this case is about a £50 saving to customer bills when, on their own figures, the difference was actually £1.
“DECC undertook an unlawful action back in 2011, and this was confirmed by the High Court, the Court of Appeal and the Supreme Court. DECC’s unlawful action caused serious damage to the solar industry and it is only right that solar firms be compensated for the damage which they suffered so they can get back to their work in an important sector. Mischaracterising the case by providing inflated and inaccurate figures does little to restore the confidence of an industry that must work closely with government if this sector is going to continue to grow.”