New guidelines for housing trusts on electricity upgrade charges
The High Court has set new guidelines for housing trusts in a test case over charges levied by an electricity company to upgrade supply systems at Mitcham Garden Village, Mitcham, Surrey.
Harrison J has ruled that the Director General of Electricity Supply was wrong in January last year to determine that residents of the complex did not need to pay £44,693 costs for an upgrade to the electricity supply system to their property to cope with installation of night storage heating.
Under a condition in London Electricity’s licence, no charge is normally made for upgrading a supply system (referred to as “reinforcement work”) if a new or increased load requirement does not exceed 25% of the existing capacity. Although on an individual basis, the increase per household at Mitcham did not approach 25%, London Electricity argued that the increases should be taken on a collective basis. Collectively, the increased demand did exceed 25%.
The High Court has set new guidelines for housing trusts in a test case over charges levied by an electricity company to upgrade supply systems at Mitcham Garden Village, Mitcham, Surrey.
Harrison J has ruled that the Director General of Electricity Supply was wrong in January last year to determine that residents of the complex did not need to pay £44,693 costs for an upgrade to the electricity supply system to their property to cope with installation of night storage heating.
Under a condition in London Electricity’s licence, no charge is normally made for upgrading a supply system (referred to as “reinforcement work”) if a new or increased load requirement does not exceed 25% of the existing capacity. Although on an individual basis, the increase per household at Mitcham did not approach 25%, London Electricity argued that the increases should be taken on a collective basis. Collectively, the increased demand did exceed 25%.
The judge found that where increased demand arises from a single identifiable project or scheme, it would be unrealistic and contrary to the provisions of the 1989 Electricity Act to allow it to be broken down into the individual requirements of each of the customers involved in the project. He said that would enable each individual customer to claim benefit from the “25% rule” and avoid payment of the connection charges.
Harrison J ruled that the works related to a collective project. “The result is that the benefit of the ‘25% rule’ cannot be claimed. The residents involved in the scheme are therefore liable to pay their proportionate share of the expenses reasonably incurred by London Electricity in carrying out the reinforcement works to such extent as is reasonable in all the circumstances,” he said.
Although the overall scheme to switch to night storage systems had been initiated by the Mitcham Garden Village Trust, and while each resident had voluntarily decided whether to make the switch or not, that did not enable them to side-step the additional charge.
The judge said that while the amount at stake in the test case was relatively modest (£508) the principle could have significant commercial consequences for the electricity supply business generally. He said that while London Electricity was anxious for a court ruling on the way such matters should be handled in the future, it had undertaken that in this case, whatever the result, the residents at Mitcham would not be left out of pocket.
R v Director General of Electricity Supply, ex parte London Electricity plc Queens Bench Division (Harrison, J) 15 May 2000.
Richard Field QC and Nigel Giffin (instructed by Herbert Smith) appeared for the applicant; Kenneth Parker QC and Mark Shaw (instructed by the Treasury Solicitor) appeared for the respondents.
PLS News 17/5/00
