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Summary

  1. Second week of public inquiry hearings into botched Renewable Heat Incentive scheme
  2. Inquiry set up after public concern over scheme's huge projected overspend
  3. Retired Court of Appeal judge Sir Patrick Coghlin chairing inquiry at Stormont
  4. Origin and introduction of initiative examined by inquiry panel
  5. Key witnesses will start to give evidence later this month
  6. Public evidence sessions expected to last until well into 2018

Live Reporting

By Robin Sheeran and Iain McDowell

All times stated are UK

That's all for now...

Inquiry counsel Donal Lunny is keen to launch into another document from his vast collection, but chair Sir Patrick Coghlin intervenes to point out that it's 17:30 and time to wrap it up for the day.

Parliament Buildings at Stormont
BBC

Join us again tomorrow for day seven of the RHI Inquiry live from the Senate chamber at Stormont.

The fun starts at 09:45 GMT - see you then.

What happened today at the RHI Inquiry?

BBC News Northern Ireland

Only one-and-a-half staff were working on the RHI scheme for much of the first year of its planning by DETI, the inquiry heard.

The RHI inquiry panel
Press Eye

Inquiry chair Sir Patrick Coghlin said it was "hard to swallow" the contention that that number was adequate to run what was a highly complex and ultimately flawed project.

The inquiry also heard that Northern Ireland did not participate in the Great Britain version of the initiative because of worries of "over-incentivisation".

'No conclusion that subsidy scheme was best option'

A "final draft report" between CEPA and DETI on 31 May 2011 revealed that none of the renewable heat initiatives that were being considered for Northern Ireland would not have delivered the 10% target for green heat production by 2020.

Sterling banknotes
Getty Images

It also determined that an up-front grant scheme - which was not adopted - would deliver the best results in terms of cost benefit.

The eventual RHI scheme was, of course, an ongoing subsidy scheme, but the "final draft report" did not conclude that it was a better option than a grant fund, Mr Lunny observes.

'We need more detail on scheme's risks'

CEPA provided a first draft report on 31 March 2011, and Mr Lunny refers to a follow-up email from DETI's Peter Hutchison to Ian Morrow of CEPA on 6 April that year.

Wide shot of the inquiry in session
RHI Inquiry

In this document under the heading of "Risk", Mr Hutchinson states: "Need a more detailed section on risks as per stage six of appraisal guidelines.

"Risks to be considered would be low uptake, rising renewable prices, low resource, low gas or oil prices, damage to other sectors, risk of perverse incentives, inadequate or overly generous support levels, etc."

'Lots of time spent answering questions from DETI'

CEPA spent much more time on its work for the department than it charged for, it claims.

In its evidence to the inquiry, it says its staff spent 131 days working on it and puts that time at a cost of more than £148,000, which is said is "much more than that £50,100" it received from DETI.

Staff working overtime
Getty Images

CEPA said that was in no small part due to having to address "the many questions and comments raised by DETI".

"This demonstrates the significant level of committment to support DETI," adds CEPA.

Mr Lunny says CEPA has provided the inquiry with "tens of thousands of pages" relating to its work on the 2011 report.

'Consultants carried out economic appraisal for scheme'

Mr Lunny turns to the subject of Cambridge Economic Policy Associates (CEPA) and AEA Technologies, two companies that worked together on an economic appraisal of the proposed RHI scheme in spring 2011.

Burning wood pellets
BBC

CEPA's remit was to make recommendations based on evidence and economic analysis about the "most cost-effective structure" for a scheme to increase renewable heat production in Northern Ireland.

AEA was essentially a sub-contractor to CEPA with a defined technical role.

'RHI would have soaked up any amount of resource'

In her submission to the inquiry, DETI's former energy division director Fiona Hepper says "resources were limited" and her staff were "working extremely hard to deliver across both domestic and non-domestic heat matters".

She says she was successful in obtaining extra staff to work on renewable heat but adds: "I appreciate that given the nature of the work in energy at that time was such that it would have continued to expand to soak up any amount of resource."

Donal Lunny
RHI Inquiry

Mr Lunny compares this with the staff resource available at DECC, where the Great Britain RHI scheme was included in the government's "major projects portfolio".

He says the inquiry will have to consider DETI's "rationale for the stark difference" in its staffing on the RHI scheme with that of DECC.

'One-and-a-half staff working on scheme's set-up'

It is "difficult to swallow" that only one-and-a-half staff at DETI "who don't have any particular expertise" were involved in the set-up of the RHI scheme, according to inquiry chair Sir Patrick Coghlin.

He points out that the project initially had £25m of funding and may have "given rise to all sorts of uncertainties".

Sir Patrick Coghlin
RHI Inquiry

"Resources seem to be terribly important here," he adds.

Mr Lunny informs the inquiry that that DECC - the government department that ran the Great Britain scheme - had 77 staff working on it at one point.

'Department doing energy work on a shoestring'

A bespoke branch set up within DETI in May 2011 to deal with the RHI scheme initially consisted of only two people.

Mr Lunny explains that it was made up of Joanne McCutcheon, who worked part-time and headed the branch, and Peter Hutchinson, before - a small number of others staff were added in 2012.

A woman working on computer
Getty Images

The inquiry will have to consider how adequate those resources were for the running of the RHI project, says Mr Lunny, and that is an issue that crops up throughout the documentary evidence and witness statements.

He quotes a statement from civil servant Shane Murphy, who says DETI's policy work was done "on a shoestring" compared with UK government departments.

And David Sterling, the then DETI permanent secretary, stated in 2011 that the department "faced a stiff task keeping pace with the energy agenda in Whitehall".

'Farmers were demanding renewable heat scheme'

Farmers were demanding for an renewable energy initiative for some time, the Ulster Farmers' Union told DETI in 2011 as part of the public consultation on the RHI scheme.

DETI officials were in "reasonably regular contact" with their colleagues in Stormont's agriculture department long before the scheme opened, says Mr Lunny.

Hens in a henhouse
Reuters

And they were "educating" the agricultural sector about the likely details of how it would run as far back as a year before it finally launched, holding presentations on the subsidies on offer.

Mr Lunny asks whether DETI considered the likely impact of its promotion on the eventual uptake of the scheme, and in particular whether there was a disproportionate uptake among agri-businesses that had a high requirement for heat, such as poultry or mushroom farmers.

'Agriculture department continued promoting RHI'

The Department of Agriculture and Rural Development (DARD) was also involved in renewables initiatives, as evidenced by the submission to the inquiry by Noel Lavery, its permanent secretary.

Mr Lunny gives the example of a DARD scheme for the growing of biomass fuel crops, starting in 2007.

CAFRE logo
CAFRE

He goes on to observe that CAFRE, a training and research branch of DARD, had included information promoting RHI at 58 events from November 2011 to October 2015.

Inquiry chair Sir Patrick Coghlin intervenes to point out that CAFRE was "carrying out promotional training events where the Department of Energy (sic) were trying their best to reduce the attraction of the scheme".

"So it seems," says Mr Lunny.

'NI would've been better off in GB scheme'

Witnesses to the inquiry have raised concerns over whether Stormont officials understood the budgetary responsibility and cost implications when they decided to go ahead with an RHI scheme specific to Northern Ireland, says Mr Lunny.

A biomass boiler
BBC

He points to a statement from Mark Coburn of the consultants Cambridge Economic Policy Associates (CEPA), who said that managing a smaller budget subject to potential large changes in accreditation levels was "always going to be more challenging than a larger one".

Regardless of the problems that arose with its own RHI scheme, Northern Ireland would have been better off in the Great Britain initiative, Mr Coburn argues.

'Familiar issues, you might think'

Mr Lunny then takes the panel to a judgement from the Court of Appeal of England and Wales from 25 January 2012, saying that DETI may have been able to assess it "to learn about what went wrong" with the Feed-In Tariff (FIT) scheme, which was referenced before lunch.

He quotes from a summary regarding the FIT scheme: "The adoption of solar PV by communities and the public has been unexpectedly successful."

Mr Lunny addresses the panel
RHI Inquiry

"The cost of installing solar PV systems had fallen substantially from about £13,000 to £9,000 for four kW".

The document continues: "The secretary of state was concerned that solar PV generators would be overcompensated", and that would limit the funds available for other technologies.

"Familiar issues, you might think," comments Mr Lunny.

'Did DETI learn lessons of previous energy initiatives?'

There were a number of energy initiatives run by DETI in Northern Ireland before the RHI scheme, and Mr Lunny runs through some them.

One of those was the Northern Ireland Renewables Obligation (NIRO), which imposed on all suppliers to source a specified share of the electricity supplied to consumers from renewable sources.

That could be achieved by submitting renewables obligation certificates to the Gas and Electricity Markets Authority (GEMA) obtained by self-generation of renewable electricity, through purchasing it from other renewable energy producers, or by making a buy-out payment to the authority.

An electricity pylon
BBC

These certificates are known as NIROCs and when the scheme was introduced each unit of electricity received one NIROC, no matter what technology was used to produce it.

However, in 2009, banding of technologies was introduced to reflect the different costs of the various technologies that were at different stages of development and that meant that different technologies received different levels of NIROCs depending on their place in the banding.

Another scheme - Reconnect, which ran between 2006 and 2009 - was expecting 375 applications, but instead there was a total of 1,240 biomass boilers installed on the scheme.

Mr Lunny asks whether DETI learned from its experience in running previous schemes.

'We'll expose truths behind RHI scandal'

There is a "thicket of complexity" to the RHI scandal, says Mr Lunny, as he lays out when he's about tell start telling the inquiry.

He says there will be a need to go into considerable detail in his presentation in order to "expose some sometimes simple truths behind the issues" that led to the scheme turning into the disaster that it became.

The RHI Inquiry
RHI Inquiry

"Some points are so important that they bear repeating," he adds.

"Certain truths and certain knowledge gaps will only be plugged during the oral evidence that we hear."

Inquiry already falling behind schedule

After more than a week's worth of background and overviews about the RHI scheme, we move to the first of four phases of this inquiry.

This part concerns the original design and implementation of the RHI scheme in Northern Ireland, and inquiry counsel Donal Lunny (below) steps up to the platform.

Donal Lunny
RHI Inquiry

His presentation was due to have started this morning but the inquiry's business is already falling behind schedule - and this is only the sixth day of hearings that are expected to run well into the spring of 2018.

Sitting times were extended yesterday and today, and inquiry chair Sir Patrick Coghlin says there'll be an earlier-than-scheduled start tomorrow, too.

Time for lunch...

Mr Aiken wraps up - for now - his summary through the early stages of both the Great Britain and the Northern Ireland RHI schemes.

After lunchtime, we'll hear from inquiry counsel on the specific origins of the Northern Ireland - proceedings resume at 14:05.

'Lessons learnt from rapid uptake surges'

DECC was anticipating that would significantly underspend on its budget for the RHI scheme until the 2014-15 financial year, and its proposed cost control measure was therefore highly unlikely to be implemented.

But Mr Aiken explains that DECC was looking to put it in place because, as it said in its consultation document, it had learnt lessons about "rapid upsurges in uptake" from a previous subsidy scheme.

Solar panels in a field
Getty Images

That scheme was the Feed-In Tariff scheme, which encouraged the use of small renewable electricity generation systems, such as solar panels and wind turbines.

Mr Barker, the then energy minister, said that scheme had failed to anticipate the development of industrial-scale installations, and DECC concluded that it was "crucial that we take a more responsible and efficient approach to public subsidy".

Mr Aiken asks: "Did any of this learning make its way to DETI?"

'Was Foster told about government's cost control plan?'

In March 2012, a consultation by DECC on the addition of cost controls in the Great Britain RHI scheme was opened, proposing a temporary suspension of the initiative if estimated spending reached a level where it could go beyond the allocated budget.

That would be done to allow time to introduce digression into the scheme, gradually lowering the subsidies on offer as the scheme grows.

Greg Barker
BBC

In a foreword in the consultation, the then energy minister Greg Barker (above) said the cost control was needed to ensure the "long-term future of the RHI" and keep its spending within its limits.

Uptake was low at the stage, he acknowledged, but consideration had to be given to cost controls early in the lifetime of the scheme as a fallback should it later take off.

Mr Aiken says DECC was getting prepared for a potential increase in demand, and the inquiry will need to consider whether the then DETI minister was informed that DECC was considering cost controls measures at that point.

'Minister signed off on RHI scheme'

Mr Aiken now refers to a submission from Ms Hepper to Mrs Foster, the then DETI minister, on 16 March 2012 seeking approval to proceed with the Northern Ireland RHI scheme.

A biomass boiler
BBC

He says it should be noted that "the submission would not be signed off by the minister until 11 April 2012".

The word "content" can be seen on the document in handwriting.

'Who decided on scheme's policy position?'

Ofgem's feasibility study for a Northern Ireland RHI scheme was issued on 16 December 2011, and it pointed out that there was no mechanism in the initiative to control its cost if the uptake was higher than anticipated.

But Mr Aiken points out that at that stage there was no provision for budget control in the Great Britain scheme that officials in Northern Ireland had ignored.

A drawer of folders
Getty Images

In DETI's application for EU state aid rules approval for the RHI scheme, it said it was not considering putting a subsidy digression mechanism into the initiative at that stage.

Mr Aiken says that he is unaware of any communication within DETI that led to the adoption of that position, and he says the inquiry will have to establish who decided on it.

'Lack of clarity doesn't reflect well on goverment'

On 28 November 2011, the regulations for the Great Britain RHI scheme came into effect and the scheme opened for apllications.

Mr Aiken says there is no overt reference to cost controls, to scheme budget caps, or to digression in the regulations' explanatory notes.

The inquiry in session
RHI Inquiry

Sir Patrick makes the point that there is a lack of clarity about the Treasury's involvement of the funding of the scheme.

"It doesn't reflect that well about the communication skill of British departments," he says.

'NI subsidy much lower than in GB scheme'

With the consultation on a proposed RHI scheme for Northern Ireland at an end, DETI's Ms Hepper gave Mrs Foster an overview of the responses on 11 November 2011.

£10 notes
BBC

Complaints were made by respondents to the consultation that the tariffs on offer were "significantly lower" than in the Great Britain scheme, says Mr Aiken.

'Great Britain scheme inappropriate for NI'

A public consultation on DETI's RHI scheme proposals launched in July 2011 is next to come under Mr Aiken's microscope.

He draws the panel's attention to a letter from Peter Hutchinson of the newly-launched renewable heat branch of DETI, which he refers to as the "dear consultee" letter.

DETI logo
DETI

Mr Aiken says it shows that the Great Britain scheme was assessed as being "inappropriate" for Northern Ireland "with the possibility of over-incentivisation and ineffectiveness".

With a consultation in place, DETI's energy division head Fiona Hepper then made a submission to the minister Mrs Foster for a feasibility study on Ofgem administering the initiative.

"Matters are travelling at pace", says Mr Aiken.

'Plan for RHI scheme was ambitious'

Arlene Foster, the then enterprise minister, told the Northern Ireland Assembly's Enterprise Committee on 21 June 2011 that her department was planning to have an RHI scheme set up for the region by April 2012.

Wood pellets
BBC

That was "ambitious, given what we now know", says Mr Aiken.

"That indicates that the path was set on the RHI."

'Much higher morality of NI people'

It is "rather amusing to see" that concerns about the potential for a perverse incentive in the RHI scheme were raised consistently by those planning the Great Britain initiative but that sense of worry was not shared by DETI, says inquiry chair Sir Patrick Coghlin.

He reminds those in the chamber that the issue was brought to DETI's attention in Octobr 2013 by the so-called concerned citizen Jeanette O'Hagan, as we heard last week.

Sir Patrick Coghlinq
BBC

He says: "The reaction [by DETI officials] to Jeanette O'Hagan, when she suggested such a thing might happen, was: 'People wouldn't do that sort of thing.'"

"Which may be a reflection on the much higher morality of the Northern Ireland population," he smiles.

'Did DETI have plans to monitor scheme?'

Mr Aiken says there are a number of points the inquiry may wish to follow up when Mr Lunny undertakes his presentation of the setting-up of the Northern Ireland scheme.

The RHI Inquiry
RHI Inquiry

These include:

  • Whether the need for an early review process of the RHI scheme was recognised within DETI
  • What needed to be monitored to know whether an early review was required
  • Whether a plan was put in place to activate that monitoring
  • At what point the proper execution of such a plan should have prompted action

'Was consideration given to perverse incentive?'

The term "perverse incentive" is one that often crops up in the RHI scandal.

That was a flaw in the scheme that saw claimants being able to increase their payments if the subsidy on offer was higher than the cost of the fuel for their renewable heat system.

Burning wood pellets in a biomass boiler
BBC

The claimant could run their boiler constantly, even if it was not needed, in order to earn more money.

Mr Aiken refers to the DECC policy document that shows Whitehall officials were well aware of the risk of the issue.

He tells the inquiry panel that it will have to assess whether any consideration was give to the perverse incentive by DETI, and if not, why it was not kept in mind.

'Digression would ensure costs were controlled'

Inquiry counsel Joseph Aiken picks up from where he left off yesterday, dealing with the Great Britain version of the RHI scheme.

He takes us back to a policy document from March 2011 about the Great Britain RHI scheme, which was set up by the Department for Energy and Climate Change (DECC).

Joseph Aiken
RHI Inquiry

Mr Aiken demonstrates how "substantial changes had taken place from the original document of 2010".

ln a section on digression, the concept of tariffs reducing for new scheme members after reviews of its operation in order to avoid over-generation, is laid out.

"It is going to be triggered when a preset point is reached so that it wouldn't start prematurely, but equally if uptake was higher than expected digression would start sooner to ensure that costs were controlled," he explains.

What happened yesterday at the RHI Inquiry?

BBC News Northern Ireland

Stormont officials removed warnings about a lack of resources available to run the RHI scheme in Northern Ireland almost four years before it was opened, the inquiry heard.

Civil servants at the Department for Enterprise, Trade and Investment (DETI) took the details out of a submission to the then minister Arlene Foster.

Wood pellets
BBC

The inquiry was also told that the Whitehall department running a similar scheme in Great Britain had done a huge amount of work to prepare for the initiative.

Read our summary from yesterday here, or you can go back over our live updates from that session here.

What is the RHI Inquiry?

BBC News Northern Ireland

An independent inquiry into the scandal was established in January by the then finance minister Máirtín Ó Muilleoir.

He ordered it in the wake of the huge public concern and what was then a developing political crisis surrounding the scheme.

Sir Patrick Coghlin
Pacemaker

The RHI Inquiry began this week and Sir Patrick Coghlin (above), a retired Court of Appeal judge, is its chair and has been given full control over how it will operate.

It will look at:

  • the design and introduction of the RHI scheme
  • the scheme's initial operation, administration, promotion and supervision
  • the introduction of revised subsidies and a usage cap for new scheme claimants in 2015
  • the scheme's closure

For more information on the RHI Inquiry, you can read our handy Q&A.

RHI scheme - the fallout

Public and political anger erupted when the scale of the overspend emerged.

The Democratic Unionist Party (DUP) leader Arlene Foster (below) had been the minister in charge of the Stormont department that set up the RHI scheme in 2012, and she faced calls in to stand down as Northern Ireland's first minister in December last year.

Arlene Foster
Reuters

She refused, and Sinn Féin's Martin McGuinness then quit as deputy first minister in protest at the DUP's handling of what had by then become a full-blown political crisis.

By doing so, he brought about the collapse of the Northern Ireland Executive. Now, nearing a full year on from that, Northern Ireland remains without a devolved administration.

You can find much more detail on the RHI scheme in our need-to-know guide.

RHI scheme - the flaws

The budget of the RHI scheme ran out of control because of critical flaws in the way it was set up - the most recent estimate for the overspend was set at £700m if cost controls are not introduced.

A biomass boiler
BBC

Claimants could effectively earn more money the more fuel they burned because the subsidies on offer for renewable fuels were far greater than the cost of the fuels themselves.

The massive overspend bill will have to be picked up by the Northern Ireland taxpayer.

RHI scheme - what was it?

Need a quick refresher on what the RHI scandal is all about? Here goes...

The Renewable Heat Incentive scheme - or RHI for short - came to the fore of the Northern Ireland public's minds in autumn last year... and the fallout from the scandal attached to it is still being felt in the region's politics today.

Burning wood pellets
BBC

The scheme was set up by the Northern Ireland Executive in 2012, as a way of encouraging businesses to switch from using fossil fuels to renewable sources for generating their heat.

Those who signed up were offered financial incentives to buy new heating systems and the fuel to run them.

Good morning

It's a damp autumn morning at Stormont as we welcome you to day six of our live coverage the RHI Inquiry.

Parliament Buildings at Stormont
BBC

Today, we'll be hearing more from the inquiry's junior counsel Joseph Aiken, who spoke yesterday about parallels between the separate Great Britain and Northern Ireland RHI schemes.

The rest of the day will be taken up by a briefing from his colleague Donal Lunny on how the RHI scheme came into being.