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

MotobimanOne

Sorry 2015

mmmmikey

MotobimanOne said:

How does the Consumer Rights 2016 impact on the contract?
Firstly the contract is for a fixed period of 25 years so if the government delete the RPI then clause 5.2 cannot be actioned as it clearly links the tariff to the RPI.

This would mean the contract terms 5.2 and 5.3 cannot be completed by Eon so they would apparently be in breach and it raises the question would they be required to compensate under general breach of contract rules?

Secondly there is a clause that allows Eon to cancel the contract in certain circumstances including changes by government but again would this be an unfair contract term?

quote

17.4 We may change these Statement of Terms. We will display any changes clearly on eonext.com.

If any changes to these Statement of Terms are of a disadvantage to You, We shall tell You about the

changes at least 30 days before they begin to apply or upon notice if the change is the result of any

change of law, relevant licence, agreement, guidance or code made by Ofgem or the Secretary of

State (or such other authoritative body).

Unquote

Hi - the English language is inifintely ambiguous which makes writing contracts in the kind of plain English people use in ordinary life. That can sometimes lead to misunderstandings and means that you need to read them very carefully. (EDIT hope this doesn't sound patronising - it wasn't meant to)

One of the keys to understanding this contract is to look for the word "We" as in "We will", "We shall", "We may", etc. which place obligations on or reserve rights for whoever "We" is (EDF in mycase). Clause 5.2 states:

"5.2 Your Generation Tariff and Your Export Tariff are linked to the Retail Price Index (RPI). If the RPI changes then We will tell You what the impact is, if any, in Your next Payment Statement."

The words "Your Generation Tariff and Your Export Tariff are linked to the Retail Price Index (RPI)" provide some context, were true at the time of the contract and as of today are still true (and clause 5.1 has already made it clear that the rules could change). The words "If the RPI changes then We will tell You what the impact is, if any, in Your next Payment Statement." put an obligation on EDF (or whoever) to let you know the impact of any RPI change. In the event that the rules change (and, to reiterate, clause 5.1 has made it clear that this could happen) so that RPI is no longer used then future RPI changes will have no impact and there's nothing for them to tell you.

The critical point here is that clause 5.2 does not obligate EDF to increase payments in line with RPI - it just states that if RPI changes and it impacts you EDF are obliged to let you know.  

Coming back to your post, once you've understood this, you'll also see that your argument is based on a false premise - nothing stops them actioning clause 5.2:

"Firstly the contract is for a fixed period of 25 years so if the government delete the RPI then clause 5.2 cannot be actioned as it clearly links the tariff to the RPI."

So there is no breach of contract and no basis for compensation that I can see.

On your second point, whether this is unfair or not is a moot point as there's no suggestion they are going to exercise the right they have reserved for themselves. I suppose you could use it as a basis for backing out of the contract yourself but that of course would be daft because all you'd be doing is cutting off whatever payments you are getting.

Bottom line is that any "breach of contract" arguments based on this contract are dead in the water. That doesn't mean that you shouldn't respond to this consultation with any objections you have, I'm just trying to make it clear that a breach of contract argument based on this contract is not only likely to fall flat on it's face, but it also gives rise to a "we told you we might change things so you've nothing to complain about" counter-argument.

Doc_N

So basically, everyone who isn’t receiving these FIT payments agrees with the government proposal. And those who are don’t.

Surprise , surprise.

mmmmikey

Doc_N said:

So basically, everyone who isn’t receiving these FIT payments agrees with the government proposal. And those who are don’t.

Surprise , surprise.

No, that's not the case at all. Many of those of us who agree with the proposal are receiving the payments even though it will leave us worse off. And I haven't checked back through the thread but IIRC the reverse is actually true with one of the objectors disagreeing on principle even though they themselves aren't receiving the payments at all. 

So you're well off the mark with your comment - did you actually read the thread?

Doc_N

mmmmikey said:

Doc_N said:

So basically, everyone who isn’t receiving these FIT payments agrees with the government proposal. And those who are don’t.

Surprise , surprise.

No, that's not the case at all. Many of those of us who agree with the proposal are receiving the payments even though it will leave us worse off. And I haven't checked back through the thread but IIRC the reverse is actually true with one of the objectors disagreeing on principle even though they themselves aren't receiving the payments at all. 

So you're well off the mark with your comment - did you actually read the thread?

Of course. Are you aware, though, that there is a life beyond this particular thread? 

Qyburn

mmmmikey said:

Many of those of us who agree with the proposal are receiving the payments even though it will leave us worse off. And I haven't checked back through the thread but IIRC the reverse is actually true with one of the objectors disagreeing on principle even though they themselves aren't receiving the payments at all. 

I have and only see one poster receiving FIT who agrees.

So you're well off the mark with your comment - did you actually read the thread?

That's a strange sort of dig at another poster, after stating that you haven't read it yourself.

matt_drummer

I receive FIT payments and I don't care what they do, it is what it is for me. If it goes up less each year, so be it.

As we purchased a house with panels already installed under the FIT scheme, I might have an issue if they want to recalculate from the start. Paying back money I haven't actually had doesn't seem fair, but if that is how it becomes then I will have to do it.

Qyburn

matt_drummer said:

I receive FIT payments and I don't care what they do, it is what it is for me. If it goes up less each year, so be it.

As we purchased a house with panels already installed under the FIT scheme, I might have an issue if they want to recalculate from the start. Paying back money I haven't actually had doesn't seem fair, but if that is how it becomes then I will have to do it.

That's not an option under consideration. The nearest is their Option 2 where the payments stay at the current rate untill CPI catches up. Thinking about that, I think it means they would have to calculate each installation separately, each from it's own specific start date.

Option 2: Temporary Freeze and Gradual Realignment with CPI

This alternative would involve freezing the tariffs at the 2025/26 level, taking effect from April 

2026 (subject to legislative schedules). The government would calculate a ‘shadow’ price 

schedule for the tariffs from 2002, annually adjusted using CPI instead of RPI. No further 

inflation-linked increases would be applied until the cumulative effect of CPI-based inflation on 

that shadow prices matches the current RPI-adjusted buy-out price. At this point of realignment

(estimated to occur in the mid-2030s), annual indexation would resume using CPI.

Doc_N

The cynic (and realist) in me suggests that that the two ‘options’ are a sleight of hand. And that when the least disadvantageous of the two is chosen by the government it will be seen by some as a win, rather than the loss it really represents. And if the government can backtrack on FIT contracts it can do exactly the same with any other of its commitments people might think can’t be changed.

matt_drummer

Qyburn said:

matt_drummer said:

I receive FIT payments and I don't care what they do, it is what it is for me. If it goes up less each year, so be it.

As we purchased a house with panels already installed under the FIT scheme, I might have an issue if they want to recalculate from the start. Paying back money I haven't actually had doesn't seem fair, but if that is how it becomes then I will have to do it.

That's not an option under consideration. The nearest is their Option 2 where the payments stay at the current rate untill CPI catches up. Thinking about that, I think it means they would have to calculate each installation separately, each from it's own specific start date.

Option 2: Temporary Freeze and Gradual Realignment with CPI

This alternative would involve freezing the tariffs at the 2025/26 level, taking effect from April 

2026 (subject to legislative schedules). The government would calculate a ‘shadow’ price 

schedule for the tariffs from 2002, annually adjusted using CPI instead of RPI. No further 

inflation-linked increases would be applied until the cumulative effect of CPI-based inflation on 

that shadow prices matches the current RPI-adjusted buy-out price. At this point of realignment

(estimated to occur in the mid-2030s), annual indexation would resume using CPI.

Well, then I really can't see this as a huge issue.

CPI is not zero nor anywhere near zero.

The current rates are good even if they increase no further.