Belfast Telegraph

Ofgem accepts RHI failings in final submission but lays responsibility for flawed green scheme with Deti

 

By Lauren Harte

The UK energy watchdog has blamed a Stormont department for the botched Renewable Heat Incentive being "fundamentally flawed" from the start.

Regulator Ofgem faced criticism for its role in running the ill-fated green energy scheme, which allowed claimants to exploit lucrative subsidy payments by burning biomass unnecessarily.

The Department of Enterprise, Trade and Investment (Deti) set up the initiative in 2012, while Ofgem was tasked with running it.

In its final submissions to the panel yesterday, Ofgem laid the blame for failure at the door of Deti.

Speaking on behalf of Ofgem, Jason Beer QC accepted significant failings, but insisted these did not cause the key problems in the scheme.

"There were many things that Ofgem could and should have done better in relation to its administration of the scheme.

"Ofgem accepts overall that it didn't communicate with Deti as effectively as it should have done," he told the inquiry.

But he said it "can't be concluded that those failings caused the key problem in the scheme".

Mr Beer added that Ofgem has identified several key problems that caused the projected vast overspend on the RHI scheme.

"The design of the scheme was fundamentally flawed from the outset," he added.

Mr Beer said Deti was responsible for drafting the legislation that led to all of those problems while Ofgem reviewed the draft legislation and warned the department of the dangers of scheme exploitation.

Mr Beer also rejected a suggestion by Deti that Ofgem didn't tell the department about its concerns around the scheme's weaknesses.

He added: "Ofgem lucidly and cogently identified a number of the risks about the design of the scheme to the department when it was drafting the regulations in November 2011.

"These are not failures by Ofgem to communicate concerns about the design of the scheme at its inception, they are failures by those to whom the concerns were communicated to heed and act upon them."

Ofgem's contractors were required to visit businesses and farms to check that boiler installations were compliant and to detect any fraud.

However, only 31 installations were checked in the first three years of the scheme, after 2,120 applications.

Ofgem also did not make Deti explicitly aware of the "phenomena" of the use of multiple boilers with heating systems serving the same loads until late 2014 or early 2015, by which time the scheme was facing huge budgetary pressures.

Unlike in Britain, no cap or payment tier system was placed on the money that could be claimed in proportion to the size of boiler here. In effect, this enabled unnecessary heat to be burned just to make money, a move that left the taxpayer with an estimated £490m bill.

The inquiry has heard that the lack of communication between Deti and Ofgem amounted to a "major systems failure" and led to public money "literally going up in smoke".

Appearing before the panel in October, Ofgem chief executive Dermot Nolan described the finding as "sobering" and admitted that the regulator had been "far from perfect" when sharing key information with Deti.

Mr Nolan added that he believed both agencies, Deti and Ofgem, were "culpable".

He acknowledged that their relationship was "not as effective" as it was with the department running the RHI scheme in Britain.

The amount of installations that were checked in the first three years of the scheme after 2,120 applications

Belfast Telegraph

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