Belfast Telegraph

Reduced RHI payments 'could put many boiler owners out of business'

Inquiry: Sir Patrick Coghlin
Inquiry: Sir Patrick Coghlin
Mark Bain

By Mark Bain

A consultation document into the future of the failed RHI green energy scheme has shown that many boiler owners who signed up before cost-cutting tariffs were introduced could be left facing financial ruin.

The process is aimed at providing the Department for the Economy with the information needed to identify its preferred option for the long-term payment structure for boiler owners.

The RHI scheme prompted the collapse of the devolved government at Stormont in January 2017. It is also the subject of a public inquiry because of the escalating costs to the taxpayer, running to hundreds of millions of pounds.

Inquiry chair Sir Patrick Coghlin is expected to deliver his conclusions later this year.

Closing the scheme completely through a compulsory buy-out is among the options being considered by the department.

That could see boiler owners compensated to reflect the fact that the scheme's 20-year term had to be cut short, but due to higher than anticipated payments already received, many boiler owners might not be entitled to any compensation at all.

Another option could see a substantial reduction in tariffs, with boiler owners expected to pay money back to the department to recoup what is regarded as prior "overcompensation".

Despite 82% of those who responded to the consultation saying a return to the original 2012 tariffs was their preferred option, the department effectively ruled out that option because it would cost over £1 billion - more than double the available funding.

Those who signed up for the botched scheme when it first opened have been hit the hardest, with many claiming cashflow problems after the tariffs were capped as costs raced out of control.

They cited that loans which were originally taken out on the strength of projections based on the original tariff had now left them facing difficulties in meeting financial commitments once the tiered tariffs were introduced.

Real concerns were also expressed that their businesses would not survive if the original tariffs were not reinstated.

In the meantime, respondents said they had resorted to the sale of assets, laying off staff, postponing maintenance or investment in their business, diverting funds from other parts of their business and restructuring loans to survive.

There were also claims that the financial pressures created by the 2017 and 2018 legislation have led to health issues, for example stress and mental health problems.

And there was a strong feeling expressed that the tiered tariff has made their business uncompetitive in comparison to their counterparts in other parts of the UK.

Some of these respondents said they had turned down the heating as a result of the tiered tariffs and that this has resulted in a lower level of comfort for staff and customers.

More reported supplementing their heating with fossil fuel, and many said they would consider switching back to fossil fuels if the tiered tariff remains.

Participants in the poultry sector said they have had to reduce the running hours of their biomass boilers or supplement them with fossil fuels, with the majority saying they would not have installed a biomass heating system under the tiered tariffs.

The document also revealed that less than 30% of boiler installers who were in business at the start of the scheme are still operating.

A total of 258 responses to the consultation were received. The department will now consider its preferred option for the long-term payment structure before asking Secretary of State Karen Bradley to bring the necessary legislation to Westminster.

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