RHI scandal: Unused regulation could recoup cash

No-one knows what the true impact of the RHI fiasco will be upon Northern Ireland's budget, with different estimates having been cited
No-one knows what the true impact of the RHI fiasco will be upon Northern Ireland's budget, with different estimates having been cited

There is a regulation which could recoup payments to some of the most flagrant abusers of the RHI scheme, it has emerged – but no claimant has yet even had payments permanently halted.

In July, the Audit Office reported allegations that Stormont’s Renewable Heat Incentive (RHI) was being abused on an astonishing scale.

It was claimed that a farmer who has no need for a biomass boiler is aiming to collect £1 million over the next 20 years for heating an empty shed.

A whistleblower also alleged that large factories with no previous heating have installed three biomass boilers with the intention to run them all year round in order to collect about £1.5 million over the next 20 years.

It has been argued that because the regulations which govern the RHI scheme had intentionally removed the cost controls which were placed in the Great Britain scheme that there is little which can be done about such abuse.

However, in response to questions from the News Letter, Ofgem – the body which administers the scheme on behalf of Stormont – has drawn attention to a rule which should be capable of addressing some of the most lucrative claims.

Under sections 33 (o) and 33 (p) of the Renewable Heat Incentive Scheme Regulations (Northern Ireland) 2012, claimants “must, if requested, provide evidence that the heat for which periodic support payments are made is used for an eligible purpose” and “they must not generate heat for the predominant purpose of increasing their periodic support payments”.

In a statement, Ofgem said: “Each installation is assessed on a case-by-case basis, but in line with the Department for the Economy’s regulations, if heating is generated predominantly for the purpose of increasing RHI payments it is ineligible for the scheme.”

However, earlier this month the department told the News Letter that just 14 claimants have had their payments suspended, with none permanently halted or money recovered.

The regulation highlighted by Ofgem would not do anything to halt payments in cases where claimants will stand to make a massive profit from legitimate use of their boiler, but it would thwart the most egregious claims.

In July, the Audit Office highlighted the eye-wateringly lucrative nature of the RHI scheme – even in cases where neither the spirit nor the letter of the law is being broken.

The Audit Office said that in cases such as the poultry industry, where chicken houses legitimately have significant heating requirements, there would be an 82% return on the farmer’s investment if the boiler ran 24 hours a day. By contrast, a farmer anywhere else in the UK would see a return of 7% in the same situation.

The Audit Office said: “In some cases such as in the poultry industry, it is possible that a biomass boiler could be used almost all of the time in order to replace an oil boiler.

“In an extreme case of the boiler being operated 24 hours a day and only being stopped for servicing ... very large profits could be realised, even though the use of the biomass boiler would still be in line with the spirit of the scheme.”

Earlier this month, DUP Economy Minister Simon Hamilton told the Assembly that an independent review of the scheme had “identified cases of possible gaming and non-compliance”.

He said that “work is ongoing to investigate the potential to take enforcement action where there is evidence that there has been non-compliance with the eligibility requirements. Advice has been sought from the Departmental Solicitor’s Office, and discussions are ongoing with Ofgem, as the scheme administrator.”

Central to the identification of RHI abuse is that the department inspects each claimant’s boilers. The News Letter asked the department about its inspections regime. A spokesman said: “In July 2016, PricewaterhouseCoopers was commissioned to undertake a programme of site inspections, a review of scheme processes and controls, and a review of legislation and guidance.

“This review superceded a review commenced by Ofgem. The PwC report has been provided to the Public Accounts Committee and will be made public in due course. The first minister recently announced a 100% programme of site inspections which will be commissioned early in 2017.”

UUP MLA Steve Aiken said: “If the Executive was really serious about stopping the gross haemorrhaging of taxpayers’ money, rather than seeking so called ‘free money’ from the UK taxpayer – which includes us all – they would already have used all the available legislative tools, and have started 18 months ago.

“I am disappointed but not surprised by the Executive’s lack of action on this. This is typical of the Executive’s response to the RHI scandal so far. It has been lacklustre, confused and inept ... it’s time to stop protecting their parties and start protecting the public purse, however late in the day – the inability to even fully quantify or agree the size of the liability will make managing the 2017 budget and preparing for 12.5% corporation tax, well nigh impossible.”