UPDATE: In a statement issued to Current±, the Department for Business, Energy and Industrial Strategy said it would “robustly defend” the challenge in the High Court.
Tempus Energy has escalated its legal challenge against the Capacity Market, demanding that all payments made under the mechanism be recovered.
The energy firm has this afternoon lodged a claim with the High Court challenging a series of decision taken by the government which, the firm claims, amount to an unlawful attempt to keep the Capacity Market in place.
The European Court of Justice’s decision to annul the scheme, based on Tempus’ claims that the European Commission failed to properly investigate the mechanism’s inner workings, has led to the CM’s effectual suspension.
However Tempus has said that its legal interpretation of the ruling means that the mechanism has been rendered unlawful and that, crucially, the government has a legal duty to not only stop the scheme but to recover all payments made until now.
Sara Bell, chief executive at Tempus, said the firm was “astounded” by the government’s “complete disregard for the law”.
Energy consumers should not be paying for these subsidies which have already been declared unlawful.”
“The decision to challenge the Capacity Market was not an easy one. It’s been a long and difficult battle to change this broken system. We have persevered because we know that we are right, the judgement on 15 November only confirmed this fact and strengthened our resolve.
“We stand on the side of consumers who are paying for an unlawful scheme that directly affects their health – not only is this morally wrong, but has now been found legally wrong, and we will enforce this ruling where our government has failed.”
The Department for Business, Energy and Industrial Strategy responded equally as strongly, insisting the government would “robustly defend” the challenge by Tempus.
“Working with the Commission and industry we are confident in the steps we are taking to reinstate the Capacity Market,” a BEIS spokesperson said.
Meanwhile, a memo sent from BEIS’ energy security team and reported by The Telegraph (£) has also revealed that market participants should expect to receive claims from Tempus shortly as a matter of procedure.
The development is likely to provide spook an investment community already impacted by repeated cuts to subsidies and proposed changes to costs under Ofgem’s Targeted Charging Review. One investor told Current± in the wake of yesterday’s challenge that it risked further denting the UK’s investment case.
