Decision to refuse £1.3 billion in renewable energy support upheld

11/08/14

The Court of Appeal (Laws, Richards and Gloster LJJ) today handed down judgment in R (Drax Power Limited) v Secretary of State for Energy and Climate Change [2014] EWCA Civ 1153.

The case concerned whether the Claimant, Drax Power Limited, was entitled to an investment contract, worth some £1.3 billion, to support the generation of renewable energy from one of its power stations in North Yorkshire. Before awarding such a contract, the Energy Act 2013 mandated that the Secretary of State make a statement to Parliament that he considered that the award of an investment contract would avoid a significant risk of a significant delay to the generation of renewable energy (the so-called “Key Criterion”).

The Secretary of State rejected Drax’s application on the basis that it did not satisfy the Key Criterion. Drax sought judicial review of that decision. As the power to award an investment contract came to an end on 1 August 2014, the initial application, and the appeal, were heard on a highly expedited basis.

At first instance, Andrews J had held that the Secretary of State’s decision was flawed, and was one that no reasonable decision-maker could have made. She therefore quashed the decision and granted a declaration that the Key Criterion was satisfied.

The Court of Appeal reached “a fundamentally different conclusion” to Andrews J and unanimously overturned her findings. Richards LJ, giving the judgment of the Court, concluded that a court should exercise great caution in going behind the experienced and technical assessment of the Department, especially where the consequence would be – as here – that the Secretary of State would be forced to make a statement to Parliament that he did not consider to be accurate. The Secretary of State had good reasons for having the concerns that he did, and the high standard for irrationality was therefore not met in this case.

The judgment is here.