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RHI overspend 'as low as £60m', court hears

Stormont officials estimated near £500m


Stormont's Department of Economy said the RHI scheme would run to over £490million of the scheme's budget.

Stormont's Department of Economy said the RHI scheme would run to over £490million of the scheme's budget.

Alex Dodd

Stormont's Department of Economy said the RHI scheme would run to over £490million of the scheme's budget.

Projected overspend in Northern Ireland's Renewable Heat Incentive scheme could be as low as £60m, the High Court heard today.

Counsel for a group of boiler owners claimed the estimated costs represented less than 0.1% of the annual £11bn block grant from Westminster.

Disputing predictions that the botched initiative will leave taxpayers with a bill of nearly £500m over 20 years, Gerald Simpson QC said: "It's as flawed an assumption as we have seen."

A judge was also told of fears that new tariff rates at the centre of a legal challenge could result in thousands of job losses.

More than 500 members of the Renewable Heat Association NI Ltd are seeking to judicially review the decision to reduce payments assured under the original 2012 regulations. They argue there was no legal power for the move announced by the Department for the Economy.

Under the scheme businesses and other non-domestic users were encouraged to move from using fossil fuels to renewable heating systems.

But with operators legitimately able to earn more cash the more fuel they burned, the cost to the public purse has been projected at up to £490 million - a figure disputed by the Association.

The debacle led to the collapse of Stormont's power-sharing administration, and the establishment of a public inquiry chaired by retired judge Sir Patrick Coghlin.

Earlier this year former Economy Minister Simon Hamilton set out revised 2017 RHI Regulations as part of cost-cutting proposals.

Lawyers for the Association contend this was an illegal step against boiler owners with 20-year contracts. They allege that the whole scheme was let down by incompetence, hopeless oversight and failed opportunities to impose cost controls.

Because the department got it wrong.... the people who made significant investments are the ones who will have to suffer.

On day two of the challenge the estimated overspend came under scrutiny.

Referring to expert economic analysis commissioned by the Association, reductions were made for boilers which failed to gain accreditation, those which broke down irreparably and operators expelled for fraud.

With the variable cost of inflation also omitted , the appraisal arrived at a cost of £161m over the scheme's 20-year lifespan.

Setting out how Northern Ireland receives £11bn a year from central government, Mr Simpson submitted: "It would represent 0.07% of the block grant."

But the bill would be cut even further, he contended, if private initiatives to build two separate combined heat and power (CHP) plants are scuppered over issues of EU state aid approval.

"It would fall to about £60m is there are no CHP plants," the barrister said.

"The headline figure (of £490m) has to be treated with a great deal of circumspection."

He added: "The methodology used by the department was simply to make a number of assumptions. Those assumptions are flawed."

Mr Justice Colton was told just over 200 members of the Association took part in a survey on the economic impact from investing in the scheme.

Mainly farmers. more than half of them responded that the reduced tariffs would impact on their ability to repay loans taken out to purchase equipment.

Based on the continued uncertainty surrounding the 2017 regulations, the court heard at least 2,000 jobs could be lost.

"We had a situation where representations were made that your tariff will be guaranteed, certainty, all those words were used, and they are now based on the department's flawed assumptions," Mr Simpson claimed.

"Because the department got it wrong all the way down the line you, the people who made the significant investments, are the ones who will have to suffer."

Belfast Telegraph