Solar groups furious over WA retrospective tariff reduction – and they’re considering legal action

The solar industry is mounting political and even legal action after suffering yet another reduction in government feed-in tariffs.

But while the industry has grown accustomed to changes in feed-in tariffs as solar power becomes cheaper and less reliant on government money, last week’s West Australian budget slighted the market by reducing tariffs retrospectively.

Thousands of customers have aligned themselves with lobby groups, and the community group Solar Citizens has already amassed more than 7,500 signatures on a petition.

John Grimes, chief executive of the Solar Council, told SmartCompany the industry is outraged over the decision to retroactively apply a reduced feed-in tariff.

“Customers in Western Australia have entered in to a scheme based on the belief that it will run for 10 years,” he says. “They’ve entered a contract based on that number.

“What’s happened here is insidious.”

Last week’s changes are significant. In 2010, the WA government said it would introduce a tariff of 40 cents per kilowatt hour, but in May 2011, that amount was cut to 30 cents for new signatories.

Last week, the government announced those who joined on the 40 cent rate will have that figure cut to just 30 cents later this year, and then 20 cents next year.

WA Treasurer Troy Buswell said he believed the move was “allowable within the constraints of the contracts”.

But Grimes says the decision is no less disappointing.

“This is a risk issue, and a confidence issue, and we oppose it vigorously on the grounds that retrospective legislation shouldn’t be part of a government trying to impose certainty.

“This is an insidious change that has been proposed.”

The solar industry isn’t upset the feed-in tariff has been reduced. Several other states have reduced their own rates, and the market has consistently said this is to be expected as solar prices become cheaper and self-sustainable.

The solar industry has also recently moved into a period of slow recovery. Hurt by the influx of cheap panels from China, prices have only just begun to recover – but not after the collapse of dozens of solar companies with hundreds of jobs lost.

Grimes says the issue is not the tariff, but the fact it retrospectively applies to customers who believed their contracts would be honoured.

But the legal avenues against the WA government are slim.

“It may be possible, there may be scope for a legal challenge. But there is a political campaign here, and I think we need to capitalise on that,” Grimes says.

He also points out the decision was made during a federal election – something which he believes may turn out badly for Liberal government.

“The timing is extraordinary,” he says. “We’re running a strong political campaign, and all solar organisations are working hard.”