UK: Tempus Energy UK court challenge, alleging failure to suspend the Capacity Market

• United Kingdom

• Energy and infrastructure - Clean energy

13-03-2019

On 5 March, Tempus Energy filed a judicial review claim against the Government in the English High Court. Tempus is alleging that the Government has failed to suspend the Capacity Market despite the recent EU Court annulment of the European Commission’s 2014 decision to clear the arrangements as State aid-compliant.

In its claim, Tempus is seeking various court orders which, among other things, quash the Government’s decisions:

1. to hold a T-1 auction (i.e. the year-ahead auction) during the summer;

2. to continue the existing agreements with deferred payments;

3. to continue collecting monies to fund the supplier charge; and

4. not to recover payments that have already been made to Capacity Market agreement holders.

Following the annulment of its decision in November 2018, the European Commission announced last month that it had opened an in-depth investigation so as to determine whether the UK Capacity Market arrangements are in line with the EU State aid rules.

Tempus’s underlying argument in these proceedings is that unless and until the European Commission issues a new State aid decision which confirms that the Capacity Market is State aid compliant, the Capacity Market arrangements are unlawful. On that basis, any payments made under that system must be recovered and no further action taken that amounts to the continuation of the Capacity Market whilst the Commission’s decision is outstanding.

It has been reported that Tempus has named more than 300 parties (principally parties which are Capacity Market agreement holders) as potentially interested parties in the litigation. This does not create any automatic obligations on these parties. However, energy generators and others who have an interest in the outcome of the case, can take an active role in the proceedings as interested parties, including by making submissions to the court in response to Tempus’s arguments in its claim.

If you would like to discuss further any of the issues raised in this briefing please contact our energy and State aid experts below.