Plans to change what households make from solar Feed-in Tariffs 'feels a breach of pro

QrizB

matt_drummer said:

I can't see what the big deal is?
...
Hardly the end of the world is it?

It's a clear breach of expectations.

People made 25-year investment decisions based on a stated return. Even for the earliest FITs we're barely halfway through that period and now the counterparty is unilaterally reducing the return.

If you committed to a 25-year bond paying a certain interest rate and the bondholder decided after a decade to reduce that rate, you'd not be claiming that it's no big deal.

mmmmikey

ppppenguin said:

When I signed up for FIT, both parties agreed to RPI indexing for 25 years. Regardless of fairness or accuracy, a contract is a contract and cannot be changed unilaterally by one party after the event. It is fundamentally dishonest to attempt to change the terms of contract part way through. It is also an abuse of power, using the overwhelming power of government against parties who, for the most part are private individuals of limited means who have limited ability to fight this in the courts.

In any case, it's a historic matter, as there have be no new FIT contracts since 2019.

You say "regardless of fairness" but I would like to think that most contributors to this forum consider "fairness" to be important. The effect of this change will be to reduce the income of FIT beneficiaries, many of whom are making a killing, by reducing the burden on the other energy customers who are paying for this. This is not about filling the government coffers, it's about balancing things out between energy users in a more equitable way (or should I say less inequitable way?) Regardless of the contractual position, is that really a bad thing?

Forgive me for being blunt, but your post does have a feeling of "stuff everyone else" although I suspect that wasn't your intention.

matt_drummer

It's 15 years, so 60% of the way through for the earliest.

They are getting 75p per kWh generated. Plus they can use it or export some or all of it and get another 15p or so.

So next year they might get 78p per kWh instead of 79p per kWh

Not what was agreed to but it is still alright!

I get FIT payments, we purchased a house in 2021 with panels that were installed in 2014.

We don't get anything like 75p though.

I have the invoice for the installation and it was just over £14,000 in March 2014, a top end installation but still quite a lot of money!


The return wasn't actually stated at the beginning as nobody knew then what inflation would be.

Most people would have made their investment decision expecting a modest rise in RPI

I suspect the deal has exceeded expectations in most cases.

So although maybe not what was originally agreed to if it is changed, it's still pretty good and hardly the end of the world.

QrizB

matt_drummer said:

The return wasn't actually stated at the beginning as nobody knew then what inflation would be.

I think it was intended to provide a return of RPI plus 5%, over the duration of the FIT. Similar to the returns that might be expected on a conventional investment.

I'll dig out the consultation paper when I'm not on my phone! 

osmarks

mmmmikey said:

You say "regardless of fairness" but I would like to think that most contributors to this forum consider "fairness" to be important. The effect of this change will be to reduce the income of FIT beneficiaries, many of whom are making a killing, by reducing the burden on the other energy customers who are paying for this. This is not about filling the government coffers, it's about balancing things out between energy users in a more equitable way (or should I say less inequitable way?) Regardless of the contractual position, is that really a bad thing?

If I agree to a contract and then unilaterally decide to alter it because I think someone else is making too much money off it, I will quite probably be sued. If I don't intend to break contracts, this enforcement is a good thing for me because people are much more likely to make them with me if my commitment to them is credible. Similarly, if the government wants people to participate in future schemes like this, it needs to be able to convince people that it means what it says.

Scot_39

The initial investment wasnt indexed - why should  the returns be ?

Any contract can be broken - if terms pass a high enough threshold to get a judge to OK.

75p/kWh - if true - I would say many would agree qualifies as unreasonable.

The only surprise here is they arent capping it completely to market rate - or simply forcing every one onto SEG

matt_drummer

osmarks said:

mmmmikey said:

You say "regardless of fairness" but I would like to think that most contributors to this forum consider "fairness" to be important. The effect of this change will be to reduce the income of FIT beneficiaries, many of whom are making a killing, by reducing the burden on the other energy customers who are paying for this. This is not about filling the government coffers, it's about balancing things out between energy users in a more equitable way (or should I say less inequitable way?) Regardless of the contractual position, is that really a bad thing?

If I agree to a contract and then unilaterally decide to alter it because I think someone else is making too much money off it, I will quite probably be sued. If I don't intend to break contracts, this enforcement is a good thing for me because people are much more likely to make them with me if my commitment to them is credible. Similarly, if the government wants people to participate in future schemes like this, it needs to be able to convince people that it means what it says.

I doubt the majority of people care that much.

It was, and is, a good deal whatever the outcome.

I do receive FIT payments but I would be happy with them at their current level for the remainder of the contract term

I think we need to remember that other energy users who don't benefit are paying for this.

In view of how things are today, perhaps a `pragmatic' view is appropriate.

In other words, stop being so greedy.

mmmmikey

osmarks said:

mmmmikey said:

You say "regardless of fairness" but I would like to think that most contributors to this forum consider "fairness" to be important. The effect of this change will be to reduce the income of FIT beneficiaries, many of whom are making a killing, by reducing the burden on the other energy customers who are paying for this. This is not about filling the government coffers, it's about balancing things out between energy users in a more equitable way (or should I say less inequitable way?) Regardless of the contractual position, is that really a bad thing?

If I agree to a contract and then unilaterally decide to alter it because I think someone else is making too much money off it, I will quite probably be sued. If I don't intend to break contracts, this enforcement is a good thing for me because people are much more likely to make them with me if my commitment to them is credible. Similarly, if the government wants people to participate in future schemes like this, it needs to be able to convince people that it means what it says.

Hi, so are you putting yourself in the "fairness doesn't matter" camp? You haven't really commented on that key aspect of my post in your response? 

matt_drummer

Scot_39 said:

The initial investment wasnt indexed - why should  the returns be ?

Any contract can be broken - if terms pass a high enough threshold to get a judge to OK.

75p/kWh - if true - I would say many would agree qualifies as unreasonable.

The only surprise here is they arent capping it completely to market rate - or simply forcing every one onto SEG

The installations were very costly in 2010 and nobody would have done it without a decent return.

However, times have changed, the amounts have increased significantly.

The financial climate has changed and expecting everybody else to contribute to these profits for the priviliged minority is now unpaletable 

The best course of action for those on FIT payments is to take what they are given.

There's an argument to say enough is enough when other less fortunate people are paying for it!

osmarks

Scot_39 said:

The initial investment wasnt indexed - why should  the returns be ?

Because people agreed to it on that basis.

Scot_39 said:

Any contract can be broken - if terms pass a high enough threshold to get a judge to OK.

75p/kWh - if true - I would say many would agree qualifies as unreasonable.

My understanding is that this is relevant to, say, fraud, and terms which are very obviously mistakes, and not just making a bet (on inflation, in this case) which turned out unfavourable to you.

matt_drummer said:

I think we need to remember that other energy users who don't benefit are paying for this.

In view of how things are today, perhaps a `pragmatic' view is appropriate.

In other words, stop being so greedy.

I don't receive feed-in tariffs.

matt_drummer said:

I doubt the majority of people care that much.

It was, and is, a good deal whatever the outcome.

People will remember this sort of thing when deciding whether to participate in any future subsidy scheme involving upfront expense.

mmmmikey said:

Hi, so are you putting yourself in the "fairness doesn't matter" camp? You haven't really commented on that key aspect of my post in your response? 

I don't share your definition of "fairness" and I felt that arguing over how we should define that would be unhelpful.