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Energy giant Drax and renewable energy firm Infinis have launched a legal challenge against changes to the Climate Change Levy (CCL) exemption made by the government in the summer budget.
The companies have initiated proceedings for a judicial review on the basis that the notice period of 24 days for the removal of the CCL exemption for renewable technologies was not appropriate.
The pair have asked the court to consider a “reasonable and proportionate notice period for withdrawal of such renewable support”.
The changes, announced by chancellor George Osborne in July, resulted in Drax stating the impact on Ebitda was in the region of £30 million in 2015 and £60 million in 2016.
Drax said it is not looking for the decision to remove the CCL exemptions to be overturned, but for the notice period to be “proportionate”, and the two year notice period granted to combined heat and power plant when this industry saw its subsidies removed.
A Drax spokesperson told Utility Week: “Twenty four days is neither a reasonable nor proportionate notice period for the removal of this exemption”
“Our legal advice confirms we have a very good foundation to challenge this decision on this basis and we have a responsibility to take action on behalf of our shareholders.”
Whitman Howard utilities analyst Angelos Anastasiou said: “Any extension to the deadline would obviously eat into the Ebitda reduction, mitigating some of the negative impact, although a successful outcome is far from assured.
“Overall, given the legal advice that the companies have been given, this seems a sensible move with some modest potential upside and with virtually no downside.”
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