Poultry farmer has ‘recouped three times his investment’ in RHI scheme
A poultry farmer challenging huge cuts to Northern Ireland’s Renewable Heat Incentive scheme has already recouped three times what he invested, the High Court heard today.
Counsel for a Stormont department argued that the £1.1m in tariffs received to date by Thomas Forgrave was a fair return on £350,000 spent on installing biomass boilers.
The north Antrim man is taking legal action over legislation introduced in 2019 which saw annual subsidies slashed from £13,000 to £2,000.
He insists those who originally signed up to the green energy initiative are lawfully entitled to rates guaranteed for 20 years.
Mr Forgrave’s lawyers claim he has suffered catastrophic consequences from drastically reduced RHI payments which threaten the viability of his award-winning business. However, a barrister representing the Department for the Economy described the return achieved to date as “very, very significant”.
Updated figures were provided on the level of subsidies to Mr Forgrave and costs associated with installing ten 99kw boilers.
Tony McGleenan QC said: “For his capital investment of just under £350,000, the tariff received is £1.1m.
“With reference to a scheme intended to incentivise the replacement of a fossil fuel boiler with a renewable heat source by providing subsidy for capital, the cost of each of the boilers has been recouped at least three times over already.”
Set up to encourage businesses and other non-domestic users to switch to environmentally friendly wood pellet burning systems, the RHI scheme was plunged into controversy after the potential cost to taxpayers emerged.
Because subsidies were higher than fuel costs it became known as “cash for ash” and closed to new entrants in 2016.
Amid fears at one stage of a potential £700m overspend, the debacle led to the fall of Stormont’s power-sharing administration in 2017.
A public inquiry identified a series of failings but found no evidence of illegal activity.
Mr Forgrave is seeking to judicially review the decision to cut payments in the Northern Ireland (Regional Rates and Energy) Act 2019.
He contends that the Department has breached his right to property protected under European law
But Mr McGleenan claimed the farmer faces “a significant challenge” to succeed in a case taken against primary legislation enacted by Westminster.
He stressed that the government had been satisfied the new provisions were compatible with the European Convention on Human Rights.
On day three of the case, the barrister asked: “Is it an oppressive burden for the applicant to receive £1.1m from the tax payer on an investment of £350,000?”
Part of the justification for cutting subsidies was said to be a concern that providing more than a 12% rate on investments would breach EU state aid law.
According to Mr McGleenan, the returns involved will still be significantly higher.
The level of payments which could have been made under previous regulations was also set out.
If the 2012 tariff had been maintained Mr Forgrave stood to receive up to £7.9m over the lifetime of the scheme, while rates introduced in 2017 would have led to him recovering almost £3.6m, according to Mr McGleenan.
“We would be mindful that the purpose of this challenge is to achieve a reversion to the 2012 tariff, to get back to that figure,” counsel pointed out.
“On the 2019 tariff, if it runs to conclusion with no change, the applicant will achieve a 59% internal rate of return.
“If you only look forward from today, on a £20-30,000 per annum return, you get a rate of return of about 12%, consistent with what the scheme was set up to do.”
The challenge is being heard amid a consultation process which could result in the scheme’s closure, with one of the proposals involving a compulsory buyout of participants.
But Mr McGleenan maintained: “Whichever future-facing tariff, taking into account past payments, the applicant has achieved a fair rate of return on his investment.
“These numbers are critical when the court comes to look at the concept of fair balance, the general interest, and legitimate expectation.
“All of those legal concepts fall to be assessed against this information.”
The hearing continues.