Supply - Renewables obligation - Claimants owning electricity generating stations
R (on the application of Infinis plc and another) v the Gas and Electricity Markets Authority: QBD (Admin) (Mr Justice Lindblom): 10 August 2011
The instant proceedings concerned two electricity generating stations fuelled by landfill gas (the stations). The previous owners of the stations entered into arrangements with public electricity suppliers pursuant to the Electricity (Non-Fossil Fuel Sources) (England and Wales) Order 1998, SI 1998/2353.
Under the Electricity from Non-Fossil Fuel Sources Saving Arrangements Order 2000, SI 2000/2727, the benefit of the arrangements was transferred from the public electricity suppliers to the interested party (NFPA) by replacement power purchase agreements (RPPAs). The claimants acquired the stations.
The deadlines for commissioning the stations were extended on a number of occasions, however, neither station could be brought within the terms of the RPPAs as the conditions precedent had not been met. The RPPAs lapsed other than certain specified residual obligations. The claimants sought accreditation of their stations.
The defendant authority replied stating that the stations were not capable of accreditation and the grant of a renewables obligation certificate as there was a Non-Fossil Fuel Order arrangement (NFFO arrangement) under article 21 of the Renewables Obligation Order 2009, SI 2009/785 (the 2009 order) and an extant qualifying arrangement under articles 6(3) and (4) of the Renewables Obligation Order 2006, SI 2006/1004 (the 2006 order) already in place with NFPA. The claimants sought judicial review of the refusal decision.
The issue for the determination of the court was whether it had been lawful for the authority to decide to refuse accreditation under article 21 of the 2009 order, and articles 6(3) and (4) of the 2006 order for the stations owned and operated by the claimants. The application would be allowed.
The presence of terms for the sale and purchase of a given amount of generating capacity was a prerequisite for a qualifying arrangement under the 2006 order and for an NFFO arrangement under the 2009 order. A defining and indispensable attribute of an NFFO arrangement was that it was contractually effective to secure the provision of generating capacity by one party to another. The exclusions in article 6(4) of the 2006 order and in article 21 of the 2009 order were engaged by the existence of a relevant arrangement that provided for the building of a generating station.
That required there to be active and enforceable provision for the construction of a specified generating station in an extant agreement which entitled one party to purchase from the other capacity generated in that facility (see - of the judgment).
By the time the claimants had made their applications for accreditation under the statutory scheme there was no longer an extant qualifying arrangement or an NFFO arrangement in existence. The statutory exclusions did not apply and the decision to exclude had been unlawful. The RPPAs had allowed the parties to negotiate an extended deadline for the satisfaction of the conditions precedent to the commencement of the contract term.
An extended deadline had been agreed. When that deadline was reached the conditions precedent had not been met. Unless the parties agreed otherwise, and apart from the residual provisions, the RPPAs were then, pursuant to its terms, to be of no force and effect. The parties had not agreed otherwise. Consequently, the RPPAs were of no force and effect other than the clauses which had been deliberately saved.
Both on a literal and a purposive approach, when the RPPAs ceased to be of force and effect they ceased to be extant qualifying arrangements and NFFO arrangements within the statutory scheme. On the lapsing of all but the residual provisions, the parties’ relationship had been reduced to a form which lacked the essential characteristics of an extant qualifying arrangement for the purposes of article 6 of the 2006 order and of an NFFO arrangement for the purposes of article 21 of the 2009 order.
The provisions which had survived the lapse of the RPPAs had not constituted an NFFO arrangement. Crucially, the residual provisions had not included any of the core terms of the RPPAs that related to the sale and supply of capacity (see , , -,  of the judgment).
The authority’s decision would be quashed (see  of the judgment).
Michael Fordham QC and Tristan Jones (instructed by Wragge & Co) for the claimants; Thomas Sharpe QC and Michael d’Arcy (instructed by Michael Knight) for the defendant; The interested party did not appear and was not represented.