Kilshane Energy Ltd v Eirgrid PLC & Anor, Coolpowra Flex Gen Ltd & Anor v Eirgrid PLC & Anor (Approved)

Factual and Procedural Background

These are twin judicial review proceedings initiated by two separate electricity-generating undertakings ("Plaintiff A" and "Plaintiff B") seeking to participate in a Capacity Auction to supply electricity capacity to the national grid. The auction was originally scheduled for November 2024. The Plaintiffs challenge the Final Qualification Decisions ("FQDs") made by the first respondent ("Company A") and the approval of those decisions by the second respondent ("The Regulatory Authority"), which excluded the Plaintiffs from the auction.

The Capacity Market invites participants to commit to delivering energy over a specified delivery period (1 October 2028 to 30 September 2029 in this case), with guaranteed capacity payments determined by a competitive auction. The Plaintiffs applied for qualification of various candidate units but were rejected by Company A on grounds of non-feasibility, a decision upheld by the Regulatory Authority. The Plaintiffs seek orders quashing these decisions.

The proceedings were fast-tracked due to the urgency related to the auction timetable, with leave granted in November 2024 and a hearing held over four days in December 2024. The court indicated an intention to deliver an immediate decision, with reasons to follow in a reserved judgment.

Separate but related judicial reviews were brought in Northern Ireland concerning the same Capacity Auction, involving different applicants and respondents, with some legal findings relevant to the present cases.

Legal Issues Presented

1. What is the applicable law governing the judicial review of the decisions—Northern Irish law or Irish law?
2. Whether there was a failure to exercise discretion or an unlawful fettering of discretion by the respondents in rejecting the applications.
3. The correct test for assessing "feasibility" under the Capacity Market Code.
4. Whether there was a breach of fair procedures in the decision-making process.
5. Whether the Regulatory Authority’s review cured earlier procedural or legal flaws.
6. Whether relief should be withheld on discretionary grounds, including futility.
7. What is the appropriate stage of the decision-making process to which the proceedings should be remitted.

Arguments of the Parties

Plaintiffs' Arguments

• The Plaintiffs contend that the respondents applied an incorrect and overly onerous test for feasibility, requiring proof that delivery was "more likely than not," whereas the correct test is whether delivery is "reasonably practicable" or "reasonably possible."
• They argue that the respondents failed to exercise a residual discretion under the Code, wrongly treating the feasibility ground as mandatory for rejection without considering whether to nonetheless admit the applications.
• The Plaintiffs assert procedural unfairness, including inadequate engagement by Company A with their submissions before the dispute resolution hearing and being confronted with new grounds and evidence late in the process.
• They claim reliance on irrelevant considerations by the respondents, such as Company A’s own inability to deliver grid upgrades, which should not affect the qualification of new capacity.
• The Plaintiffs submit that the final Regulatory Authority review did not cure the earlier legal and procedural errors.
• They seek quashing of the final decisions and remittal for reconsideration but do not seek direct admission to the auction by court order, recognizing the technical complexity involved.

Respondents' Arguments

• Company A and the Regulatory Authority argue that the correct legal test for feasibility was applied, involving regulatory judgment about whether in-time delivery was reasonably possible.
• They deny any failure to exercise discretion or fettering of discretion, submitting that the decision to reject was a single, reasoned decision based on the expert assessment of feasibility.
• The respondents maintain there was no procedural unfairness, emphasizing the phased decision-making process with multiple opportunities for Plaintiffs to make their case, including oral hearings before the dispute resolution board.
• They contend that reliance on information from external sources, such as Gas Networks Ireland, was permissible and relevant to assessing feasibility.
• The Regulatory Authority submits that its approval process involved a structured and careful review including a "decision tree" methodology, which sufficiently encompassed any residual discretion and had curative effect on earlier errors.
• They argue that even if errors occurred, it is highly unlikely that remittal would lead to a different outcome, and thus relief should be withheld on futility grounds.
• They emphasize the need for curial deference to expert regulators on technical and evaluative matters.

Additional Arguments

• The Minister for the Environment, Climate and Communications was a notice party, primarily concerned with public interest and interlocutory injunction applications, which became unnecessary due to postponement of the auction.
• The Northern Ireland proceedings and judgment were relied upon, particularly regarding interpretation of the Code and the requirement to exercise discretion under feasibility grounds.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Prime Power Generation Limited & EP Kilroot Limited v. Northern Ireland Authority for Utility Regulation [2024] NIKB 102	Interpretation of the Capacity Market Code; requirement to exercise residual discretion under section E.7.2.1(f); test for feasibility; procedural fairness.	The court accepted the legal analysis of Scoffield J. as binding on the interpretation of the Code and agreed that the respondents failed to exercise the residual discretion required by the Code, rendering their decisions unlawful.
Sherwin v. Minister for the Environment [2004] 4 I.R. 279	Fettering of discretion by a public decision-maker; requirement to properly exercise discretionary powers.	Relied upon to support the proposition that failure to exercise discretion is unlawful. The court found the respondents fettered their discretion similarly.
Mulhare v. Cork City Council [2017] IEHC 288	Principles of administrative law regarding discretion and procedural fairness.	Referenced in support of the fettering of discretion argument.
Re Duff [2024] NICA 42	Requirement for decision-makers to have proper awareness and consideration of relevant policies and data when exercising discretion.	Used by analogy to conclude that respondents failed to properly consider their discretion under the Code.
O'Keeffe v. An Bord Pleanála [1993] 1 I.R. 39	Judicial deference to expert decision-makers on technical matters.	The court emphasized the need to respect expert judgment in technical regulatory decisions.
Campus Oil v. Minister for Industry and Energy (No. 2) [1983] I.R. 88	Presumption of validity of decisions made by statutory bodies.	Applied to underscore the presumption in favor of the respondents’ decisions absent proof to the contrary.
H.A. v Minister for Justice [2022] IECA 166	Doctrine of futility in judicial review; when relief should be refused despite legal error.	The court applied the principles set out by Donnelly J. to reject the respondents’ futility argument, finding that remittal could benefit the Plaintiffs.
C.S.B. v. Minister for Social Protection [2016] IECA 116	Requirement that decision-makers not consider themselves bound to a particular outcome; unlawful fettering of discretion.	Supported the conclusion that the respondents unlawfully fettered their discretion by treating the feasibility ground as mandatory for rejection.
McGraddie v. McGraddie [2013] 1 WLR 2477	Standard of review for factual findings by appellate courts ("plainly wrong").	Used by analogy to explain the standard of review applied by the Regulatory Authority and to discuss limits on curative effect of review.

Court's Reasoning and Analysis

The court commenced by addressing the dispute over the applicable law. While the Capacity Market Code ("CMC") provides that disputes are governed by Northern Irish law, the court held that the judicial review jurisdiction exercised in this jurisdiction requires application of Irish administrative law principles. However, the court found that the outcome would be the same under either legal system and thus proceeded on that basis.

Central to the court's analysis was the interpretation of section E.7.2.1(f) of the CMC, which permits but does not mandate rejection of an application on grounds of non-feasibility. The court adopted the analysis of Scoffield J. in the Northern Ireland proceedings, which established that the decision-maker must carry out a two-step process: first, determine whether the new capacity is feasible; second, if not feasible, exercise a residual discretion whether to admit the application nonetheless.

The court found, on the balance of probabilities, that neither Company A nor the Regulatory Authority exercised this residual discretion. Instead, they treated non-feasibility as an automatic bar, effectively fettering their discretion. This was a fundamental legal error rendering the decisions invalid.

Regarding the test for feasibility, the court adopted the definition provided in Prime Power: feasibility means that delivery is "reasonably practicable" or "reasonably possible," a standard less stringent than "more likely than not." The court found that the Dispute Resolution Board ("DRB") panel erroneously applied the higher "more likely than not" standard, which unfairly raised the burden on applicants and adversely affected their qualification chances.

The court acknowledged procedural fairness issues, particularly in the Kilshane case, where Company A failed to engage adequately with the applicant’s detailed submissions and evidence prior to the DRB hearing, placing the applicant at a disadvantage. Although the court did not find it appropriate to make a definitive finding on the allegation of being "ambushed," it recognized that the level of engagement was unsatisfactory.

In the Coolpowra proceedings, the court noted that certain critical updated documents and emails were not considered by the Regulatory Authority at the final review stage. While the court accepted that the applicants bore some responsibility for the failure to properly place these materials before the decision-makers, it regarded this omission as unsatisfactory and relevant to the overall fairness assessment.

The respondents argued that the Regulatory Authority’s review had a curative effect on earlier errors through its "decision tree" methodology and application of a "plainly wrong" standard of review. The court was not convinced that the limited nature of this review was sufficient to cure the fundamental legal and procedural errors identified, particularly given the erroneous feasibility test and failure to exercise residual discretion at earlier stages.

On the issue of whether relief should be withheld on futility grounds, the court applied established principles requiring caution in refusing relief. It found that the respondents failed to discharge the burden of proving that remittal would inevitably lead to the same outcome. The court emphasized that the judicial review process focuses on the lawfulness and procedural fairness of the decision-making rather than the substantive merits, which are for the expert decision-makers.

In balancing the interests of justice and the practicalities of the auction timetable, the court concluded that remittal should be to the final decision-making stage (the Regulatory Authority's committee). This approach would minimize disruption while allowing a fuller merits-based reconsideration in accordance with law and fair procedures.

Holding and Implications

HOLDING: The court QUASHED the final decisions of the Regulatory Authority in both cases and REMITTED the applications to the Regulatory Authority’s committee for reconsideration in accordance with law.

IMPLICATIONS: The court declined to grant direct admission to the Capacity Auction, recognizing that such decisions involve expert technical judgment beyond the court’s remit. The ruling emphasizes the necessity for decision-makers to properly exercise all discretions under the Capacity Market Code, apply the correct legal test for feasibility, and comply with fair procedures throughout the multi-layered qualification process. The decision does not establish new legal precedent beyond affirming established principles of administrative law and contractual interpretation in the regulatory context. The remittal allows the expert bodies to reconsider the applications properly, potentially affecting participation in the upcoming Capacity Auction. The court also highlighted the need for improved timetabling and procedural arrangements to avoid undue pressure and ensure fairness in future auctions.