Three solar firms are seeking over £2 million in damages from the Government because of losses they claim they have incurred as a result of unlawful cuts Ministers tried to impose to the Feed-in Tariff (FiT) last year.
The companies, one of which is Burnley-based Solarlec PV Solutions
and two of which are not being named, are requesting the Department of Energy and Climate Change
(DECC) compensate them for financial losses they say they have suffered as a result of attempts to rush through cuts to the FiT
last December. In a landmark case
, the cuts were ruled 'unlawful and unfair’ by the High Court in December. The decision was subsequently upheld by the Court of Appeal and Supreme Court earlier this year.
Letter before claim
Lawyers acting on behalf of the three solar firms issued a 'letter before claim’ to DECC on Wednesday requesting it pay more than £2 million in damages or face legal action.
The solar firms are seeking damages on the grounds that they have seen among other things a reduction in orders, a drop in sales and profit margin and the loss of substantial contracts, including 'free solar schemes "virtually over night".
Last October, DECC Ministers announced they were going to slash the FiT for solar electricity by half ahead of a consultation on changes to the subsidy for small-scale renewable energy had run its course. The decision resulted in a massive drop in installations.
The class action is the first to be taken against DECC after it ran out of legal options in March when the Supreme Court rejected a final appeal bid by Energy Secretary Ed Davey. The Supreme Court’s decision effectively opened the way for solar companies and installers to sue the Government for loss of business.
Losses incurred "very real"
Nick Keighley, founding director, Solarlec, said his company had been forced to cut costs and make redundancies this year following a drop off in business. "Unfortunately, the losses incurred as a result of the Feed-in Tariff cuts are very real. Solarlec has had an incredibly tough eight months, making redundancies and cutting costs wherever possible. We are keeping our business moving, but the reality is that we suffered substantial damage. […]Today we’re respectfully asking that the department acknowledges its unlawful behaviour and rectifies the damage caused to the industry. We can then put this behind us and get moving to create the solar future the public wants."
The class action is being handled by Prospect Law, the legal firm which successfully defeated the Government in the FiT High Court case.
A spokesperson for the firm urged the Government to offer compensation. "The 2008 Energy Act and the Feed-in Tariff effectively provide a set of rules for delivering the UK’s clean energy future. The way in which DECC administered this positive framework for solar PV created a 'legitimate expectation’ under which both the public and industry could operate. But the premature and unlawful cuts, announced by the Minister on 31st October last year, ignored the Government’s own policy framework," he said.
"By casting aside the rules under which the solar industry operated, the Government caused major financial losses and materially harmed the confidence of both consumers and the industry. Solar is a robust industry, and one the public wants, but significant damage has been done to the sector. We urge the Government to act responsibly, face up to its unlawful conduct and the damage this caused and to offer compensation."
A DECC spokesperson acknowledged a letter before action had been received and said: "We are considering its content."
Ministers have been given 14 days to respond to the letter, after which Prospect Law said a claim would be issued.
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