UK: Tempus Energy UK court challenge, alleging failure to suspend the Capacity Market – update on progress

• United Kingdom

• Energy and infrastructure

20-05-2019

On 5 March, Tempus Energy filed a judicial review claim against the Government in the English High Court. Tempus Energy alleged 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, without carrying out an in-depth formal investigation.

Tempus’s claim is proceeding in respect of four grounds of challenge which concern the Government’s decisions:

0. to hold a T-1 auction (i.e. the year-ahead auction) during the summer;
0. to continue the existing agreements with deferred payments (pending the results of the Commission’s in depth investigation);
0. in respect of funding the supplier charge; and
0. not to recover payments that have already been made to Capacity Market agreement holders.

Separately, the European Commission has commenced an in-depth investigation into the UK Capacity Market arrangements and their compliance with the EU State aid rules. In that context, the European Commission has invited interested parties to submit their views on various aspects of the capacity market arrangements. The investigation can take up to 18 months to conclude, and in certain circumstances, even longer. At the same time, the European Commission has also appealed the EU Court’s decision to suspend the UK Capacity market.

The English Court claim is now proceeding through the Administrative Court and a hearing is expected later this year. A number of Interested Parties in the litigation have noted their interest in the claim and have chosen to file Acknowledgments of Service and summary grounds.

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