RHI overspend to be cut – but taxpayers may still pay

The public inquiry into the RHI scheme is due to begin public hearings in October
The public inquiry into the RHI scheme is due to begin public hearings in October

The total bill for the RHI scheme will be reduced after a major power plant was excluded from the scheme, it has emerged - but those bill may still be paid by taxpayers, via a different public funding stream.

The estimated £490 million overspend on the RHI scheme could fall by about £160 million because Combined Heat and Power (CHP) plants will no longer be eligible for RHI subsidies, according to unspecified sources in the renewable energy industry quoted in yesterday’s Belfast Telegraph.

CHP plants were meant to be part of the RHI scheme but, according to yesterday’s report, the Department for the Economy (DFE) only realised this year that it had not properly notified the EU of the fact in order to clear state aid procedures.

The department said that although it had initially included CHP plants in the RHI overspend, they would now have to be funded separately.

According to an Audit Office report last year, there were at least two CHP plants to which the department had given “preliminary accreditation”.

The original RHI overspend was estimated by the department at about £400 million over 20 years. Then, just before Christmas last year, the department said that “the maximum burden on the budget” could be £490 million.

In a statement, the department said: “The £490 million figure for the lifetime overspend of the scheme was estimated by the department last year as a reasonable estimate at that time if no action was taken to reduce the level of over-compensation to scheme participants. It included an estimate of the cost of CHP applications.

“The introduction of the 2017 RHI Regulations on 1 April 2017 reduces the forecast expenditure in the scheme by around £30m for the financial year 17/18, leaving a forecasted overspend of £3m in this financial year. The department is currently developing a long term tariff structure that will mean that it will live within budget during the schemes operation.”

Public evidence hearings of the public inquiry into the RHI scheme are expected to begin in mid-October and last into next year.

Last week the Irish Farmers’ Journal reported that RHI boiler owners – who are locked in a High Court battle with the department, fighting Stormont’s retrospective cuts to their subsidies – are claiming that the RHI overspend could be less than £100 million, based on the exclusion of the CHP plants and using a different metric to measure costs over time. However, details of how the figure was arrived at were not revealed.