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Audit report reveals £45m bill for RHI last year

The Renewable Heat Incentive (RHI) cost £45m in the last financial year a report from the Northern Ireland Audit Office has revealed.

The controversial non-domestic RHI scheme accounted for the bulk of the spend – £42m of the cost over the 2016-17 financial year.

But only £18m was covered by the UK Treasury. The report confirms that the remaining £27m had to be met from within the Department for the Economy (DfE) and the NI Executive Budget.

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Comptroller and Auditor General (C&AG) Kieran Donnelly, who carried out the audit of DfE accounts said, “At the inception of the scheme it had been intended that all of the costs should have been met from AME (the Annually Managed Expenditure from HM Treasury) and therefore if the scheme had had proper cost controls in place then none of the costs should have had to be met from the NI budget.”

REPORT FINDINGS:

Inspectors appointed by DfE to visit recipients identified issues in over half of the 295 boilers inspected.

Of the 1,687 boilers installed prior to November 18 2015, which are currently in payment, 659 (39%) are using the boilers for more than 50% of the available hours in a year i.e. more than 12 hours a day and seven days a week all year round – with an RHI subsidy per boiler in 2016-17 of at least £28,000.

Of these, ten boilers are being used for 90% or more of the available hours with a subsidy per boiler of at least £50,000 in 2016-17.

No. of hours run by boilers during 2016-17 for installation before November 18 2015. (Source: NIAO)

The auditor said that in many cases, applicants installed several boilers with a lower heat capacity rather than a single boiler with a higher heat capacity. He said, “This was because of a significant reduction in the subsidy rate paid per kWh by the scheme over a certain level.”

Over 70% of applications prior to November 18 2015 were for multiple 99kW boilers at a single site.

However the introduction of a new tiered tariff on November 18 2015 placed a cap of 400,000 kWh. The report found “a considerably different pattern of usage” in the revised scheme.

Of the 251 boilers installed under the new tariff, 96% were being used for 30% or less of the hours in a year and only one was used for more than 50% of the hours in a year.

CHALLENGE TO NEW RATES

DfE has introduced new regulations for 2017-18 imposing the tiered rate on all users, even those who applied after November 18 2015.

But it only applies for one year. DfE is intending to consult on the rates to be applied in future.

The new regulations are also subject to an ongoing judicial review.

The report states this “has challenged the ability of the department to significantly vary the subsidy rates other than in line with inflation”.

The maximum payment for boilers under the revised scheme is around £19,600 (for a typical 199kW boiler) compared with around £56,370 (for a typical 99kW boiler) under the previous regulations.

The new regulations put the estimated cost to DfE for 2017-18 at £24m compared to £52m had the old regulations continued to stand. That would’ve placed a £30m burden on the NI budget. As it stands, the cost will be £2m for 2017-18.

Mr Donnelly states, “The C&AG has again qualified his audit opinion on the 2016-17 financial accounts because he was not satisfied that the controls operated by the department were adequate to prevent or detect abuse of the scheme and because a substantial part of the scheme expenditure (£18.8 million) was not approved by the then Department of Finance and Personnel.”

BACKGROUND

The RHI scheme was set up in 2012 by DUP leader Arlene Foster in her role as Enterprise Minister.

When the cost of the seriously flawed scheme eventually entered the public domain, it was estimated that it could cost Stormont £490m over the next 20 years.

The fallout over RHI largely contributed to Martin McGuinness’ resignation as Deputy First Minister, resulting in the March election and the current deadlock.

• reduced tariff has been introduced for all non-domestic recipients for 2017-18, reducing the cost to £22m for the UK Treasury and £2m for the NI block grant. But the move is now subject to both a legal challenge and consultation.

• As a result is that the Comptroller and Auditor General states that at this stage it is not possible to estimate the total cost and impact on the block grant for the remainder of the scheme (set to run until 2037-38).

The RHI scheme is now also subject to a public inquiry led by retired judge Sir Patrick Coghlin.

Sinn Féin continue to insist that Arlene Foster must stand aside as First Minister until that process is complete.

In May, DfE released an updated list of recipients under the non-domestic RHI scheme. It revealed that more than one-third of applications came from Co Tyrone, receiving £23m up to the end of February 2017. It’s believed there have been around 725 boilers installed in Tyrone under the non-domestic RHI scheme.

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