QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| THE QUEEN ON THE APPLICATION OF UTILITA ENERGY LIMITED
|- and -
|SECRETARY OF STATE FOR BUSINESS, ENERGY AND INDUSTRIAL STRATEGY
Anneli Howard, Anneliese Blackwood and Imogen Proud (instructed by Government Legal Department) for the Defendant
Hearing dates: 23, 24 and 25 July 2019
Crown Copyright ©
The Honourable Mr Justice Lewis:
The Government's Policy
"The roll-out duty
39.1 The licensee must take all reasonable steps to ensure that a Smart Metering System is installed on or before 31 December 2020 at each Domestic premises or Designated Premises in respect of which it is the relevant Electricity Supplier. "
The April 2018 Consultations
"that any SMETS1 meters that are not enrolled in the DCC must be replaced with SMETS2 meters by the end of 2020 is intended to ensure that all consumers with smart meters retain a smart service when they switch energy supplier."
"Question 1: Do you agree with the proposal that suppliers should be required to take all reasonable steps to enrol SMETS1 meters in the DCC, or replace with SMETS2 meters within a specified time frame?"
"Question 5: Do you agree with the proposal that any unenrolled SMETS1 meters should be replaced with SMETS2 meters by the end of 2020?"
The October Decisions
The Second Decision
" this approach introduces further regulatory complexity compared to a single end date for all meter replacements, but this would apply for a limited period. As noted above, our overall aim is to maximise consumer benefits and avoid market-wide risks and we consider that the proposed end dates would deliver this objective in a proportionate way, reflecting the status of the transition. Whilst we also continue to be mindful of the potential impact of the SMETS1 end date on prepayment customers, who are likely to be vulnerable, we remain of the view that an optimised transition to SMETS2 meters is as much to their benefit as it is to consumers generally."
"11. For prepayment customers, who are more likely to be disabled or otherwise vulnerable, the consequences of immature services could more directly affect their customer experience than for credit customers. We have seen over the summer that energy suppliers have continued to prioritise their SMETS2 credit transition, and plan to build the additional prepayment requirements on top of this. This reinforces the importance of providing more time for the prepayment transition so as to help avoid the risk of hiatus. We will therefore lay before Parliament draft modifications to the Smart Energy Code that allow us to set a later SMETS1 prepayment end date of 15 March 2019.
"12. In summary, we assess that these decisions will deliver a smoother transition to SMETS2 meter deployments and best support the overall implementation of the Programme and the realisation of the additional benefits of SMETS2 to consumers, including vulnerable consumers."
The Third Decision
"Whether a net societal benefit exists
Whether there is an acceptable level of security for the end to end smart metering system
Whether the delivery of a potential solution in respect of the meter type in question is technically feasible."
"6. One consultation response (Utilita) claims that there are potential negative impacts of premature enrolment of SMETS1 meters in the DCC.
-They provide services to prepayment customers over and above minimum SMETS1 requirements
-They allow for customers to self-serve in areas where there is no intermittent Wide Area Network (WAN) coverage, by inputting a Unique Transaction Reference Number (UTRN) locally at the meter
They claim that both of these may no longer be possible once the meter is enrolled.
"7. For the reasons given in the table below we consider that these potential adverse effects can be avoided or mitigated by the supplier, and with that are significantly outweighed by the benefits to the prepayment customer of Secure SMETS1 enrolment.
"8. Utilita also claimed that if issues arise when the meter is migrated to the DCC this could result in prepayment customers losing supply. In addition, Utilita have previously claimed that key prepayment commands (including topping up) will not be sufficiently prioritised once SMETS1 meters are enrolled in the DCC. We do not consider these adverse effects should arise for the reasons set out below".
"We do not consider that enrolment of Secure SMETS1 meters in the DCC would necessarily result in any material downgrade in functionality for prepayment customers. By contrast, were energy suppliers permitted to continue to operate SMETS1 meters outside of the DCC it would mean that a consumer risks losing their smart service and/or requiring a meter replacement if they switch energy supplier which would result in a poor outcome for the consumer. Moreover, this negative outcome could be particularly pronounced for vulnerable consumers and those with protected characteristics."
"For the reasons outlined above, the government has concluded that it will require DCC to provide SMETS1 services for Secure meters. These considerations take into account, in particular, a positive net societal benefit, security and technical factors and includes strategic considerations such as the wider public policy benefits of having interoperable smart meters for consumers with Secure SMETS1 meters. This follows support from almost all but one of the consultation respondents for this position".
(1) In relation to the First Decision (and in particular, the obligation to replace all unenrolled SMETS1 meters by the end of 2020):
(a) Was the First Decision irrational and/or inconsistent in that, in particular, it treated Secure SMETS1 meters in the same way as the four cohorts of SMETS1 meters which were eligible for enrolment in the DCC?
(b) Was the First Decision taken without proper consultation because it was unclear that it would apply to Secure SMETS1 meters?
(c) Did the defendant fail to assess the environmental impact of the duty to replace any unenrolled meters by the end of 2020?
(2) In relation to all three decisions:
(a) Were the First and Second Decision unlawful, and is it arguable that the Third Decision is unlawful (and if so, was it unlawful) because of a failure to have regard to (i) the public sector equality duty imposed by section 149 of the 2010 Act or (ii) the duties imposed by sections 4AA of the Gas Act 1986 and 3A of the Electricity Act 1989?
(3) Is it arguable that the Third Decision was unlawful (and if so, was the decision unlawful) because:
(a) the defendant (i) made a material error of fact or took into account an irrelevant consideration by including as a benefit the fact that enrolment would avoid the costs of having to replace Secure SMETS1 by the end of 2020 and/or (ii) failed to take account of a relevant consideration, namely a proportion of the core costs of the DCC?
(b) the outcome of consultation exercise was predetermined?
(4) Does the First Decision involve a breach of the claimant's rights under A1P1 or any common law property rights?
THE FIRST ISSUE THE LAWFULNESS OF THE FIRST DECISION
Issue 1(a) - The Alleged Irrationality or Unlawfulness of the Approach Adopted
Issue 1(b) the Adequacy of the Consultation Exercise
Issue 1(c) Assessment of Environmental Impacts
THE SECOND ISSUE - EQUALITY AND STATUTORY CONSIDERATIONS
"(3) In performing the duties under subsections (1B), (1C) and (2), the Secretary of State or the Authority shall have regard to the interests of
(a) individuals who are disabled or chronically sick;
(b) individuals of pensionable age;
(c) individuals with low incomes; and
(d) individuals in rural areas
But that is not to be taken as implying that regard may not be had to the interests of other descriptions of consumer."
"(1) A public authority must, in the exercise of its functions, have due regard to the need to
(b) advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it;
"(3) Having due regard to the need to advance equality of opportunity between persons who share a relevant protected characteristic and persons who do not share it involves having due regard, in particular, to the need to
(a) remove or minimise disadvantages suffered by persons who share a relevant protected characteristic that are connected to that characteristic;
(b) take steps to meet the needs of persons who share a relevant protected characteristic that are different from the needs of persons who do not share it;
" (7) The relevant protected characteristics are
THE THIRD ISSUE IS THE THIRD DECISION ARGUABLY UNLAWFUL?
Issue 3(a) - The Calculation in the Cost-Benefit Analysis
Issue 3(b) Was the outcome of the consultation on the Third Decision predetermined?
THE FOURTH ISSUE A1P1
"Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in accordance in the public interest and subject to the conditions provided by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties."