RHI: Previously unknown mess costs taxpayers extra £830,000

The flawed non-domestic RHI scheme has already cost �830,000, and the bill will continue to rise
The flawed non-domestic RHI scheme has already cost �830,000, and the bill will continue to rise
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More than three years after the RHI scheme was shut, a major new flaw has been uncovered which has cost taxpayers hundreds of thousands of pounds.

Until now, it has been believed that the problems in RHI were purely in the non-domestic scheme because it was that scheme which provided a perverse ‘burn to earn’ incentive, with uncapped payments encouraging some people to run their boilers virtually round the clock.

But now it has emerged that the smaller domestic RHI scheme – which Arlene Foster’s then department launched at the end of 2014 – also has a significant problem.

The new development will add to concerns about the ability of Stormont’s civil servants to run schemes according to the rules which they have themselves written.

Unlike the non-domestic scheme, where Stormont outsourced the process of accrediting applications and making payments to Ofgem, in this case it cannot blame anyone but itself because the administration of the domestic scheme took place in-house within Stormont.

The Department for the Economy’s (DfE) annual accounts, which were published on its website this week without any press release to highlight what had happened, reveal the problem.

The Department for the Economy (DfE) told the News Letter that the problem with the domestic scheme has already cost taxpayers more than £830,000 and that after legal advice it had decided to continue with the payments, meaning that the bill will rise.

DfE’s accounts say that during the last financial year payments of £169,000 were made to five Energy Service Companies (ESCOs) who were accredited for 110 installations on the domestic RHI scheme. ESCOs agree to install boilers, and then typically keep the RHI cash for themselves.

The DfE accounts said: “These accreditations contravene Regulation 17(1) of the Domestic Renewable Heat Incentive Scheme Regulations (Northern Ireland) 2014, which stipulates that only a “person (that) owns or occupies the property to which the plant provides heat” could apply for accreditation. Therefore the payments made to the ESCOs under the scheme are irregular.”

There was no further explanation as to why civil servants had approved such payments or whether disciplinary action would be taken around what had happened.

The accounts reveal a series of other blunders and concerns about the state of the department - which for more than two years has been operating without any ministerial oversight or democratic accountability.

The accounts reveal problems in another green energy scheme, the Northern Ireland Renewables Obligation (NIRO), especially in relation to anaerobic digestion plants.

It said that as a result of whistleblower allegations risks had been identified in “a very small minority of generators” and there were “two key areas of ongoing concern”.

DfE’s own head of internal audit found that it had only “limited risk management, control and governance processes”, while its external auditor, Comptroller and Auditor General Kieran Donnelly, again qualified the department’s accounts.

The Department for the Economy’s accounts reveal that last year it moved from having what until 2017 had been a huge RHI overspend to having a £1.9 million underspend – using less than the sum of money made available by the Treasury for renewable heat.

That is hugely significant because it relates to the situation before the swingeing cuts to RHI rates which Westminster passed in March which will see rates plummet.

That means that next year - and for every remaining year of the 20-year scheme - there will be a huge underspend.

The department has said that it intends to re-open an RHI-type scheme in the future.

The Comptroller and Auditor General, Kieran Donnelly, said that the significant fall in heat use may suggest that in some cases “heat produced before April 2017 was not actually required for business purposes but rather some of it may have been produced only with a view to increasing RHI payments”.