Risk of excessive payments to RHI claimants not analysed, probe told

A CONSULTANT has been questioned over why issues with the tiering system in the Renewable Heat Incentive (RHI) scheme which pushed the initiative over budget were not spotted earlier.

It is estimated that RHI will eventually cost the taxpayer more than £500m due to errors in its design.

Junior counsel to the RHI Inquiry Donal Lunny asked Mark Cockburn, director of Cambridge Economic Policy Associates Ltd (CEPA), why consultants at his organOn isation did not appear to have made clear to the former Stormont Department of Enterprise, Trade and Investment (DETI) how changes to certain key variables would affect the calculation of the subsidy tariff on offer through the scheme.

CEPA is the London-based consultancy that was contracted to design the RHI scheme. Mr Cockburn responded that it was assumed DETI had an understanding of how it would work “because they’re running policy”. The inquiry heard that consultants did not carry out an analysis of the risk of RHI claimants being overcompensated because they considered it to be a “remote possibility”.

Mr Lunny put it to Mr Cockburn that it was CEPA’s job to look at risks and ways of mitigating them.

However, Mr Cockburn responded: “There was no evidential track record of these things happening.”

Mr Cockburn also told the inquiry that CEPA was unable to go into a deep level of analysis of details of RHI because of the limited budget it was given by DETI.

“You’re assuming that we had some kind of endless budget to go and think of every eventuality,” he said, responding to Mr Lunny’s questioning about why certain analysis was not done.

Mr Lunny also said there was an important question about whether the need for tiering in the Northern Ireland scheme should have been spotted by CEPA and DETI in 2012.

Mr Cockburn said it was “not ultimately clear” that it was within CEPA’s remit, but he could understand why it could have been seen that way and accepted that there ought to have been tiering of the 5.9p tariff in 2012.

missing tiering, he added: “That was human error — all we needed was for someone to just say: ‘Are you sure about that?’”

RHI was established to incentivise businesses to shift to renewable energy sources by offering a proportion of the costs to run eco-friendly boilers.

But in Northern Ireland the subsidy tariffs were set too high and without a cap, so it is ending up paying out significantly more than the price of the fuel.

It sparked a political row that resulted in the collapse of Stormont in January. The inquiry into the issue was set up earlier this year to establish facts and probe why costs spiralled.

The inquiry, which is chaired by retired judge Sir Patrick Coghlin (left), will resume on Tuesday.