feed in tarrif being reduced

paul991

wonder what would happen if the gov changed the way subsides are paid to to power companies midway in a contract .Would it not end up in court?

Qyburn

paul991 said:

wonder what would happen if the gov changed the way subsides are paid to to power companies midway in a contract .Would it not end up in court?

I guess that option would be open to you as well, I think it would be a Judicial Review.

jimjames

Baldytyke88 said:

Qyburn said:

The consultation seems to be solely about whether FIT generation rates should increase by RPI or by CPI. Neither of the options would reduce the rates paid.

I believe RPI is the highest measure of inflation and CPI the lowest. CPIH is the best measure of inflation, as recommended by the ONS.

So changing to a poorer measure of inflation would be wrong.

That might be the case but RPI is no longer an official measure of inflation which would explain the attempt to change it to the current measure of CPI.

michaels

On another thread it is suggesting the change will be backdated to the start of the contract so most in receipt of FIT will see no increase until cumulative CPI overtakes current total RPI increase since installation.  Is this correct?

QrizB

michaels said:

On another thread it is suggesting the change will be backdated to the start of the contract so most in receipt of FIT will see no increase until cumulative CPI overtakes current total RPI increase since installation.  Is this correct?

There are two headline proposals in the consultation, as detailed in the consultation paper.

One is to simply replace RPI with CPI for future increases.

The other is to replace RPI with CPI then freeze payment rates until CPI from the start of the scheme catches up.

Qyburn

It can be argued that there was no need for indexing in the first place. Initial capital costs were paid at 2011 (or whenever) prices, so that's the figure that needs to be recovered, with profit of course. If finance was taken out then again the payments were based on the 2011 (or whenever) capital cost. For example if you're paying a mortgage the loan balance doesn't increase with inflation.

EricMears

Qyburn said:

It can be argued that there was no need for indexing in the first place. Initial capital costs were paid at 2011 (or whenever) prices, so that's the figure that needs to be recovered, with profit of course. If finance was taken out then again the payments were based on the 2011 (or whenever) capital cost. For example if you're paying a mortgage the loan balance doesn't increase with inflation.

Whilst that's probably a valid point,  it doesn't alter the fact that a particular deal was offered and accepted so should have created a firm contract.  For one party to a contract to seek to amend the terms retrospectively would create a dangerous precedent.    What can we expect next :   Perhaps getting invoiced for all the free or discounted medicines we might have received from the NHS since 1948 because a later government feels that the original terms were too generous ?     

QrizB

Qyburn said:

It can be argued that there was no need for indexing in the first place.

The original government intention was that the FIT payments would give a real (after-inflation) return of 5% over the period of the FIT, equivalent to putting the same amount of money into a conventional investment like a SSISA or SIPP.

If the FIT payments hadn't been index-linked, an assumed inflation rate would have been necessary. This would have meant the initial FIT being paid at a much higher rate.

mgfvvc

Don' t fill out the consultation, it's just there to cover their asses, write to your MP. It might not make much difference, but there's more chance of it being noticed.

Doc_N

This might well be relevant:

https://www.pinsentmasons.com/out-law/news/government-loses-appeal-on-solar-feed-in-tariffs