Another Look At Ministerial Discretion In The Renewable Energy Sector

From time to time clients ask what is the scope of a minister's discretion to change course with respect to stated government policies: Absent the passage of new legislation or the promulgation of new regulations to implement a new policy, the short answer is that exercises of ministerial discretion must fall within the four corners of existing legislation, including the four corners of any policy-making authority granted to the minister under that legislation.

In a recent energy@gowlings, we reviewed the Ontario Court of Appeal's decision in Trillium Power Wind Corporation v. Her Majesty the Queen in Right of the Province of Ontario. In that case, the Court of Appeal affirmed a principle of judicial deference towards certain high-level changes in ministerial policy. There, the Court dismissed a challenge to the Ontario government's decision to suspend further offshore wind development, notwithstanding the fact that Trillium had incurred substantial expense in the mistaken belief that a previously announced policy would continue in place. Underlying the Trillium case was a very broad-based policy-making authority reserved to the relevant ministers under the Electricity Act (Ontario) and Environmental Protection Act (Ontario).

A very interesting comparison case, also in the renewable energy sector, is the decision of the English Court of Appeal in The Secretary of State for Energy and Climate Change v. Friends of the Earth and Others [2012] EWCA Civ. 28; [2012] All ER (D) 139. Under the UK Energy Act 2008 (the "Act"), the UK Secretary of State for Energy and Climate Change (the "Minister") was responsible for setting tariff rates for small-scale solar installations ("SSSIs"). By February 2011, the Minister was becoming concerned that too many installations were being pursued and that solar tariff payables might swamp the government's total budget allotment for such projects. In addition, with panel prices rapidly declining, the Minister was concerned that the continued payment of high tariffs would provide new SSSI developers with excessively high rates of return. As a result, the Minister wanted to promptly reduce tariff rates for all future solar development.

Under the UK renewables program, SSSI developers were required to agree to certain "standard conditions" developed by the ministry. The Minister had the right to "modify the standard conditions for the purposes of making arrangements for the administration of a scheme of financial...