Official Report: Minutes of Evidence

The Chairperson (Mr Brett): Gentlemen, you are all very welcome to the Committee. We have Andrew Trimble, executive chair, Renewable Heat Association Ltd; John Martin, director, Renewable Heat Association Ltd; and Alan Hegan, Hegan Biomass Ltd. The Committee wants to give you the opportunity to make your representations. As you will be aware, the Department has asked the Committee to give its consideration to a statutory rule (SR). At this stage, the Committee has not been asked to make a decision on the future or otherwise of the scheme. Hopefully, your remarks will refer to what is before the Committee for decision today.

With that, Andrew, I hand over to you, sir.

Mr Andrew Trimble (Renewable Heat Association): Chair, thank you very much. I have been the chair of the Renewable Heat Association since March 2017. I have no commercial or personal interest in the scheme. I was a deponent in the 2017 judicial review (JR). I gave evidence before the renewable heat incentive (RHI) public inquiry, the 2019 House of Commons Select Committee inquiry and the Economy Committee's private session on 11 March 2020. I also gave evidence to the Buglass review and a further House of Commons Select Committee hearing in November 2023. I submitted responses on behalf of the association to all three public consultations on the future of RHI: the consultation in 2018, the consultation in 2020 and the consultation in 2021.

I would like to introduce my colleagues, who will speak to the reasons why they are witnesses here.

Mr John Martin (Renewable Heat Association): Thank you very much, Chairman. I have been involved in our family farming business for 35 years. I developed an interest in bioenergy, having seen successful enterprises in Sweden and Austria. I planted 40 acres of short-rotation willow as an energy crop in 2004-05 as part of a developing Northern Ireland biomass sector. To date, our fuel has generated 8·3 million kW of heat on a neighbouring National Trust property. I invested in drying and storage infrastructure in 2008 and 2012, respectively. Like lots of other small businesses, nursing homes, hotels, undertakers, GAA and golf clubs, churches and charities, I installed a biomass boiler in 2015 at a cost of £45,000, which was funded with a bank loan of £40,000. I was audited in August 2017 and handed a clear audit report, which confirmed that the rate of return that I received under the 2017 tariff was 12·7%. Therefore, it was impossible for the 2019 tariff to return a 12% rate. Since that time, I have received a negative rate of return.

Mr Alan Hegan (Renewable Heat Association): Good morning, I have 20 years' experience in renewable heat. I have been involved in the full biomass supply chain from the initial inception of NI supply chains of energy crop and biomass right through to boiler installation and servicing. I am a director of Hegan Biomass Ltd, which is a small business based outside Dungannon, County Tyrone. I am a woodchip representative on the steering committee for the Wood Fuel Quality Assurance (WFQA) scheme, which is the Irish equivalent of the Woodsure certification scheme. The steering committee includes industry representatives and Irish Government officials from the Sustainable Energy Authority of Ireland (SEAI) and the Department of Agriculture, Food and the Marine (DAFM).

I have been involved in a varied spectrum of biomass supply chains, from the inception of energy crops and biomass through to boiler installation and servicing. We have installed over 200 boilers across GB, NI and the Republic of Ireland. We have a detailed and comparative knowledge of the GB RHI, the NI RHI and the Irish support scheme for renewable heat (SSRH) schemes, as well as the stimulating renewable energy plus (SDE+) regulation in the Netherlands. We are the primary contractor in NI and border counties for woody energy crops, such as short-rotation coppice (SRC) willow harvesting, processing and sales, and we manage around 400 hectares in that regard. Between that and woodchips, we produce about 15,000 saleable tons of wood fuel per annum. That is sold to around 100 customers in NI and Ireland. We see NI as a reducing market and ROI as a growth market, with the majority of our customer base now in the Republic. We have worked alongside the Agri-Food and Biosciences Institute (AFBI) in several biomass research projects, including those involving the diversion of rural non-performing waste water treatment works outflows in the Lough Neagh catchment in Tyrone, Armagh and Monaghan and the Finn catchment in Donegal to SRC energy crop plantations, reducing the nutrient-loading discharge by over 95%. The subsequent crop is then used in the biomass supply chain.

Mr Trimble: I make the Committee aware of the seven-page documentation and the 10 attachments that we provided to you. I will reference those during this statement. I fully accept that those may be published and that, from this point, are to be treated as though they are in the public domain.

The Department's proposal to return participants to a 12% proof return is proof positive that the Department accepts that the rebate introduced at its request by Westminster in 2019, using emergency procedures, could never have delivered a 12% rate of return. The remedy proposed by the Department for only the final five months of this year is inadequate, given that the underpayment has existed for over 66 months. It is our assessment that a remedy could be made within budget, but that that would require a multi-year approach.

I move now to the 2019 legislation. The Assembly authorised reducing the 2017 rebate by 90%, supposedly because it delivered a return of 19%, which the EU would not allow. That reduction was carried forward in legislation by the Secretary of State in 2018. It is preposterous to suggest that, if you reduce a return of 19% by 90%, you will get a result of a 12% rate of return. You do not need to be Carol Vorderman to know that.

Scheme participants have been under-compensated every year since 2019. That is years, not months — although it is a total of 66 months. Senior officials in the Department knew, or might reasonably have been expected to know, that that was the case. Indeed, one senior official has put his knowledge of the matter in writing. The former Secretary of State was advised that that was the case. He said so in a response to the Chair of the House of Commons Select Committee on Northern Ireland Affairs, Simon Hoare. That Select Committee conducted a formal inquiry into the passage of the 2019 Westminster legislation. It characterised the legislation as "a raw deal" and stated that the calculations leading to that tariff needed to be reviewed. It is our position that Cornwall Insight did not discharge that recommendation. The 2020 Cornwall report, upon which this SL1 and SR are based, is not an appropriate foundation. An independent consultant's report that was submitted as part of the 2021 consultation concluded:

It also stated:

I move now to the history of the scheme, staying within the Chair's direction. The RHI regulations were introduced without a proper definition of the term "heating system". That is cited in chapter 48 of the RHI public inquiry report. The scheme intent was to meet the 2010 energy strategy and the counter climate change targets by delivering 29,000 conversions to renewable heat. There were three cohorts. In 2012, 1,200 or so sub-100 kW systems were accredited for 20 years at a fixed tariff, changeable only by inflation proofing. In 2017, a further 2,700 domestic systems were accredited for a period of seven years. In 2015, a further 300 sub-200 kW non-domestic systems were accredited, also for 20 years. All three projects required state aid approval. All the schemes were suspended to new applicants, and the scheme has remained suspended since 2016. The participants in the domestic scheme, which was for seven years, have all expired and represent no liability to the budget.

The consequences of the 2017 amendment, introduced as an urgent procedure following an SL1, have been far-reaching. The first point to draw the Committee's attention to is the fact that that regulation meant that, from March 2018, there was no lawful authority for the Department to run any scheme for one of the cohorts. There were public consultations in 2018, 2020 and 2021. Now, the Department is bringing forward an amendment to remedy all the problems that have been previously addressed. The non-domestic scheme extends in capacity from systems of low tens of kilowatts through to systems of thousands of kilowatts, including in supermarkets, universities and hospitals. The group of participants affected by the proposal includes churches, sports clubs, GAA clubs, golf clubs, charities, an addiction rehabilitation unit, community centres, hotels and hospitality businesses, all of which, in their business cases, have relied on the Government's guarantee, which has been welshed on. The scheme should be closed to new entrants. It should no longer remain suspended. Existing participants should be enabled to continue to use renewable energy and not revert to fossil fuels. The only way to do that is by assuring them a 12% rate of return.

The Committee is right to insist on procedural fairness and the observance of common law. The Committee will be alive to the obligations that the Assembly operates under with regard to the Windsor framework, the European human rights charter, European Union Commission requirements and climate change legislation. The Committee also needs to be alive to the criticisms levelled against the Department's processes in Mr Justice Humphreys's judgement in the case of Dennison versus the Department for the Economy.

The Department's current presentation of an SL1 in circumstances where confidentiality was required is extraordinary. It is for the Committee to determine whether that was procedurally unfair. The Department for the Economy has behaved like the Post Office in the Horizon scandal. The Post Office's management of the public narrative, as well as its management of reports and audits that it conducted and of subsequent reviews of the Horizon IT system, have been exposed. We say that the Department has manipulated source data and produced it in a filtered format to suit its agenda in public, before Committees at Stormont and Westminster, and before the courts. Both the Post Office and the Department have ignored the very independent reports that they themselves commissioned. Both have abused audit procedures. The recent High Court judgement in the Dennison case relates to Ofgem-Department interactions on statutory reviews and shows that the Department was incapable of applying even a modicum of reasonableness to its business behaviour, audit and statutory review.

The proposed SL1 is presented as a remedy to a state of under-compensation that both the Department and Secretary of State accept has existed for at least five years. Independent forensic analysis of a consultant's report commissioned by the Department in 2017 indicates that the scheme had actually delivered a negative rate of return at that point. That report, which was admitted in evidence before the High Court, said that the stated return on the spreadsheet was the result of typed-in input and not the function of a formula in that spreadsheet. In short, the consultant's answer was 12%, irrespective of what the question was. The Department has some history of presenting proposals without there being appropriate vouching papers, and I know that the Committee has asked for documentary material to support the calculations.

There have been three public consultations, with no apparent observance of the Gunning principles with regard to their outcome. We question the proposal to cherry-pick the 2020 consultation paper and add inflation to the recommended tariffs, given that the procedures used by Cornwall Insight in 2020 conflicted with the recommendations of the 2019 Westminster inquiry, which had made detailed recommendations. The directive to use an incorrect set of opex costs and to use inaccurate capex costs extinguishes any credibility that the Cornwall report had. Consequently, it extinguishes the value of the consultation report. The Department has presented the Cornwall report as the basis of its SL1, which would lead to statutory regulation, even though documentation that has been presented to the Committee from one of the Ministers in the then Executive in 2020 indicates that it was never the Executive's opinion that the 2020 Cornwall report should be accepted and its recommendations endorsed.

I have provided the Committee with several briefing papers. Your pack includes, on page 83, cost information on how much a system truly might cost. My two colleagues have spoken to that matter already. There is a letter, on page 84, from the then permanent secretary, who talks about the true purpose of the legislation that was introduced in 2019. In 2020, Andrew Buglass reported on RHI owner hardship. Please see sections 9 and 10, where he determined that there was no possibility of a positive return from operating renewable energy at that point. Minister Poots's letter is at page 134 of your pack, and the Grant Thornton report is at page 136. The correspondence in 2023 between the Secretary of State and the Select Committee on Northern Ireland Affairs is at page 194, and I draw your attention to the comments in the second and third substantive paragraphs. At page 198 of your pack is a letter from Richard Rodgers, a senior official in the Department for the Economy, confirming that the Department accepts that a state of under-compensation has existed since 2019 and that that might only have come to the attention of the Department in 2020.

The cause of the problem is multifaceted, but I draw your attention to the final paragraph of the 2017 Optimal Economics review, which is on page 209 of your packs. It found that Northern Ireland was not resourced to meet the aspiration for 29,000 boilers to be accredited into the system. Northern Ireland was resourced at a Barnett consequential of 2·98%, yet had a far greater percentage of installed capacity. Note, in particular, the different approach taken by the Scottish Government, who accepted admission to the national scheme and therefore received a benefit disproportionate to their Barnett consequential.

I draw your attention to the Grant Thornton report conclusion at page 190 of the pack. I will not read it into evidence at this point, but the conclusion is that the previous reports were fundamentally flawed and should not be relied upon for the calculation of any tariff. In 2019, the tariff was set by Westminster at 1·7p at tier 1 and 0p at tier 2. In 2019, Ricardo, commissioned by the Department, recommended an uplift to 2·5p at tier 1, but that uplift was never introduced. In 2020, Cornwall, as part of the 2020-21 consultation, recommended an uplift to 3·6p at tier 1 and a second tier of 0·5p. In 2021, Grant Thornton revised all calculations provided by the Civil Service and recommended a tariff of 9·1p at tier 1 and 2·95p at tier 2.

A question at a previous session of the Committee was, "How does this compare with the rest of the United Kingdom?". From April 2024, an early adopter in the UK national scheme is paid 13p at tier 1 and 3·4p at tier 2. On an hours-based calculation, with a system that is twice as large as the one that predominates in Northern Ireland, the rest of the United Kingdom receives a significantly greater financial benefit — it is twice the benefit supplied in Northern Ireland. A state of affairs has been created where industry operating in Northern Ireland — this is a non-domestic, commercial scheme — and using renewable energy is at a serious disadvantage to its competitors in the Republic of Ireland and the rest of the United Kingdom.

Chair, that was lengthy. I am happy to take questions. I am also happy to report to the Committee after this session on any factual evidence that it would like to question me on, because, I imagine, your deliberations on the matter will be lengthy.

The Chairperson (Mr Brett): Andrew, thank you very much. That was useful. Thank you also to John and Alan.

I will try to separate a number of issues, if that is possible, Andrew. The current tariff, dating from 2019, is obviously not covered by what is before the Committee —.

Mr Trimble: It is actually, Chair. The process that has been followed is that the tariff was set in 2019 through Westminster, at the request of the Department. That tariff has been amended only by inflation. The Committee has been presented with a proposition based on a 2020 consultation that is known to be flawed and was the subject of much disharmony across the Executive, as evidenced by Mr Poots's letter to Mr Murphy, which had the title "Tariff Review Proposal". There is a lag time. We are trying to remedy a problem that was created in 2019 and for which the Department has no authority to increase, other than through an Executive decision.

The Chairperson (Mr Brett): That issue remains outstanding, and, while I do not want to pre-empt what the Committee may ask officials, members may want to ask about that. However, the point that I was trying to make is that I want to separate what the Committee is currently being asked to deal with, what remains outstanding and what future issues may come before the Committee about the proposed closure or otherwise. The point that I want to get to is on the proposed tariff that the Department has put to the Committee to bring to the Assembly. Do you have a view on what the tariff should be set at from November?

Mr Trimble: As I set out in my letter, the history of legislative engagement in the project, for budgetary control reasons apparently, is that the tariff has been set retrospectively. I put it to the Committee that, if the purpose of bringing forward the amendment is to remedy a long-standing issue, making the tariff effective from 1 November does not meet that, by a country mile.

The Chairperson (Mr Brett): For the record, what, in your view or the view of the association, should the tariff be?

Mr Trimble: We spent a lot of time and effort basing our calculations on actual system installations in 2021. The Committee has my response. There were six questions in the consultation process. Is the proposed amendment the outworking of the 2020 consultation? I would say that it cannot be. Is there a need for a proposed amendment to be the outworking of the 2021 consultation, the consultation report and analysis of which we have not been furnished with? If you are asking me for a succinct answer, let us go with the 2021 consultation. Let us base it on fact and evidence. Everybody seems to agree that the 2019 tariff was wrong. At what point did the Department know, or might it reasonably have known, that it was wrong? Mr Rodgers has said that that point was 2020. OK; what is the Department going to do about that? Then, we have the unresolved matter of the 2021 consultation.

I think that I am right that, in central government, a consultation report must be published within 12 weeks of a consultation's completing. I have made various environmental information requests (EIRs), up to and including an appeal to the Information Commissioner, to have this consultation report published. The consultation report is, however, protected by the addition of the term "Draft" to the top and the bottom.

The Chairperson (Mr Brett): I go back to my question, Andrew. The Department has set out what, in its view, the tariff should be from 1 November. For the record and for those watching, I will say that that is set out clearly. So that members can draw a comparison: in your view or the view of the association, what should the tariff be?

Mr Trimble: It should be the 2021 consultation response tariff, which I have read into evidence, and that should be uplifted by the CPI for inflation proofing.

The Chairperson (Mr Brett): John, thank you for your evidence. You articulated the financial pressures that the scheme has placed on you, given your negative return following the 2019 tariff. Have you done any calculations as to what the rate of return, negative or positive, would be on your system from the tariff that the Department proposes?

Mr Martin: Through use and age, a boiler requires increased servicing and repair. We are seeing a significant increase in those costs. Part of the negative return is caused by that substantial annual cost. I am a seasonal user of my boiler, because I do not have a continuous requirement to dry my woodchip. The maximum that I could have earned under the 2019 tariff for a long period was £2,100 or thereabouts. My servicing and repair costs were in excess of that, before I paid for insurance, electricity, fuel or any of those other things. Any uplift would be welcome, but the proposed tariff falls a long way short of increasing operational costs. It is the same as buying a car. As, I am sure, Committee members understand, as a car ages, the costs of maintaining it in a roadworthy condition increase.

The Chairperson (Mr Brett): I am trying to get that figure out there in the public; that is why I have asked the question on a number of occasions. John, do you have a view on what the figure should be?

Mr Martin: As Andrew outlined, the Grant Thornton report set out, clearly and in great detail, the full cost of installing and operating a system. Grant Thornton based its full calculation on that. Obviously, we have seen significant inflation between 2021 and now, which also has to be factored in. We are at a significant disadvantage to our near neighbours in the Republic of Ireland and Great Britain, as Alan and Andrew outlined.

Mr Honeyford: I want to pick up on the fairness bit. I will start with the question that Philip asked. John, you said that you were on 12·7% previously, and the Department now says that it is 12%. What is the difference in the cost there? I understand that it is 0·7%, but what is the difference in outcome from that? What are we talking about?

Mr Martin: In my situation, it has been a negative rate of return since 2019. My audit was in August 2017, and, as I said, it was clear; no issues were found. As part of that report, the auditor indicated that my rate of return based on the Department's calculations at that time was 12·7%. Since the tariff was reduced by 90% from April 2019, it has been an impossibility for me to continue to receive 12%, as the Department maintains. For the reasons that I have outlined — the increased costs of operation, servicing and repair — I have operated at a negative rate of return.

I took out a loan of £40,000 from the bank with quarterly repayments of £1,325. My RHI income was insufficient to meet those repayments. I would never have been able to repay the loan solely on the basis of the income that I derived from installing my boiler. I was at a financial disadvantage by installing a biomass boiler. I would have been much better off had I installed an oil or gas boiler at the outset. I had to use private funds that were destined for private pension contributions to clear that debt, because there is no way that I could ever commercially clear that loan on the basis of the income that I made from the system.

Mr Honeyford: If that rate has dropped and you are saying that it is negative, how are we being told that it is 12%? That is the bit that I cannot get my head around.

Mr Martin: I think that Andrew Buglass, in his report for the Department, was tasked with looking at hardship. Andrew and Alan can speak to the detail, but it was deemed that in excess of 400 boilers or installations would never meet a positive rate of return. There was a case for buyout for those installations, but that was not progressed. Funds were identified, but, as I understand it, when the Assembly was re-formed, that fell away and was never progressed. That was clearly identified by Andrew Buglass as long ago as 2018 or 2019.

Mr Trimble: To clarify that point, the 2019 legislation made provision for the Department to buy out those who would never break even. Twelve million pounds was set aside over three years to buy those parties out. That facility was never used by the Department, and then, when the re-formation of the Assembly occurred in January 2020, that authority to continue with that voluntary buyout —.

I submitted a freedom of information request to ask how many boilers, the Department understood, would attrit from the system through mechanical failure or otherwise. The Department said that it had not, in its projections for an overspend, considered the attrition of boilers, less the 480 that would be liable for the voluntary buyout. In 2019, a quarter of the systems were known by the Department, using flawed methodology, to be unable to pay for themselves, and yet the proposal to encourage people to adopt renewable energy was that they would get a return of 12% on their investment in order that they could take out loans at commercial rates.

You will see that the one-page business case for adopting biomass that I have provided to the Department — the costings sheet — encourages people who have maxed out their business overdraft to take out HP. An HP loan cannot be restructured or repaid early, and it is certainly in the interest range of 4% to 12%. We have one member of the association who is in bankruptcy proceedings. I have given evidence with regard to their parlous state. They have 26 employees. They purchased a number of the boilers and took out commercial loans at 12% APR.

Mr Honeyford: I will pick up on something that you have just said. You say that there was a mechanism to buy out and to, basically, end for a quarter of the —.

Mr Trimble: For those who, the Department identified, could never, under the 2019 tariff, achieve break-even.

Mr Honeyford: OK, and that has never been implemented.

Mr Trimble: That was never exercised. The Department prevaricated about it.

Mr Honeyford: Why?

Mr Trimble: Well, you should ask the departmental officials. They are better placed than me.

Mr Honeyford: OK. You also said, at a point, that there was a spreadsheet from the Department and no matter what you put into it, it came out with 12% at the end.

Mr Trimble: No.

Mr Honeyford: No?

Mr Trimble: The forensic analysis in the 2017 judicial review of one of the consultant reports that the Department had commissioned — I will provide the exact evidence afterwards — came to the conclusion that it excluded certain of the capital costs and some of the operational costs. If some of those were put in, it reduced the rate of return from 12·9% to 6%. Then, when the forensic accountant tried to make any rational interpretation of the spreadsheet, he came to the conclusion that the consultants — not the Department, the consultants — had put forward a piece of evidence to justify a tariff that would deliver a 12% rate of return where they appeared to have typed into the field some random numbers and then the answer was 12%.

Mr Honeyford: That spreadsheet is what the Department is using. Is that what you —?

Mr Trimble: That spreadsheet was used by the Department in its previous calculation in 2015. If you build a house on sand, you will have a construction problem.

Mr Honeyford: I have one final question. I am trying to work out where the 12% — how the differential is. You are saying that they say that it is 12% and you say that it is a negative figure. I was thinking about the miscalculation of numbers and where that is coming from. How can it be so drastically different? From 12% to a negative is drastic.

Mr Trimble: It is properly and comprehensively set out in the Grant Thornton report, which was part of our consultation in 2021.

Mr Martin: The answer is, partially, this: 12% of what? In the public inquiry, Sir Patrick Coghlin identified that you cannot put an RHI boiler in a field in isolation and have a working heat system. You have to have heat exchangers, pipework, infrastructure, buildings and other costs that, initially, the Department said, were included in the calculation, but, subsequently, in calculating the 12% rate of return, those elements were excluded. That is the difference between the Northern Ireland scheme and those of our neighbours in the Republic of Ireland and in GB.

Mr Hegan: Indeed, the NIRO consultation document in Ireland sets out the costs in great detail. That is quite a good read.

Mr Middleton: I have a couple of questions. The first is in relation to the report that you provided, Andrew, and a couple of recommendations in it. Your fifth recommendation was:

and you go on to recommend that:

Can you talk us through exactly what the impact of that would be, as you have said, for the legitimate participants in the scheme?

Mr Trimble: Thank you for the question. The first thing to draw to the Committee's attention is that, in the extant legislation, regulation 34(1) requires that, at the 10th anniversary of the accreditation, the participants invest further in a heat-metering system. It actually says that it is an accreditation: you can have it recalibrated. That is like saying that you could recalibrate a speedometer: if the speedometer in your car is broken, you take it out, replace it with a new one and declare to the Driver and Vehicle Agency (DVA) or whatever else that you have a new speedometer. The cost of that will fall in this financial year, and it is £1,000. The maximum rebate that is payable if you used your boiler for the maximum period is just over £2,000.

The scheme was set up to encourage people to move to and stay with renewable energy. If their outstanding expenditure over and above what they would be liable for in running a fossil fuel system is not repaid, they will revert to fossil fuel in their droves. The Department's aspiration of 29,000 boilers was unrealistic. Under 'New Decade, New Approach' (NDNA), the Department was directed to come up with a new scheme. I do not know whether it has invented the technology, but, since 'New Decade, New Approach' in 2020, nothing has been done to encourage a move to renewable energy. In Northern Ireland, 28% of emissions are from fossil fuels used in heating domestic homes. In GB, £1 billion was granted last year to support renewable energy in domestic homes.

Mr Middleton: Thank you for that. I have another question. There is a lot of public interest in the scheme. One of the limiting factors is its cost to the UK Government. How big a limiting factor is that? I appreciate that that is also a question for officials, but how limiting is that in consideration of the new tariff?

Mr Trimble: The scheme is uniquely funded using annually managed expenditure (AME): if it is not spent in-year, it goes back to HM Treasury. As stated in my brief and as officials briefed the Economy Committee in 2020, £25 million went back to Treasury in 2020. The totality of the potential underspend is far greater than any telephone number overspend that was ever alleged.

I have furnished the Committee with a link to the Department's statistics that show the income and expenditure each year. It is my understanding that income for the last three years has been a level £33·5 million. It should not be: if it is linked to 2·98% of the national spend, it should have increased significantly above that. The liability in each of the past three years has been of the order of £3 million. I have written to the Department's witness at the previous session to say that they may have misspoken on the fact that it costs the Department £5 million each and every year. The Department has not published its financial statistics for the last two years. I believe that something in the region of £260 million over the life of the programme has been returned to His Majesty's Treasury unused and that that money should properly have been used to make a just transition to renewable energy.

Mr Middleton: Thanks for that. We will ask officials further questions, but I note your comments on the consultation and the questions that were asked at the Committee meeting two weeks ago about the 2021 consultation responses. In the interests of transparency and making sure that people know exactly what has been said, that should also be published. Thank you for that.

Mr Trimble: If I may, I will respond to a comment that Ms Nicholl made at the last session. I draw the Committee's attention to the 2020 consultation report, which relates to the Cornwall paper. The Executive's conclusion was, "What we need now is another consultation with four options: two for closure and two for some form of continuation".

Mr McGuigan: Thanks for your evidence. My question is a small one that David and John may have answered in talking about a boiler in a field in isolation. What difference is there between the operation of the boilers of the 400 participants who made no money or were negative and those of the others who either broke even or made money? I am confused about the different operations.

Mr Hegan: The target rate of return is 12%. That is supposed to be the median or mean point, so, obviously, as in any field where you have different participants, there will be people above it and people below it. Again, the Department may be better placed to answer the question, but it thought that the lower 25 percentile would never get a positive rate of return. It accepted that, and it was based on its figures.

Its solution to that was, potentially, to buy the people out. That never occurred. The answer, I suppose, is that everybody will have a different rate of return. There will not be any unique rate of return; it will depend on everybody's individual circumstances.

My answer is that, in 2019, everybody's rate of return went down to a point that was probably zero or negative. That is where the disagreement between our position and DFE's position is. We suggest that the Grant Thornton report is a good solution. There were 480 consultation responses, and we would like to see the outworking of that.

Mr Martin: EU state aid provides for a range with an average, as Alan outlined. There is an acceptable range within any programme that systems can justifiably comply with, but the overall average target for the scheme was 12%.

Mr McGuigan: Thank you.

Mr Trimble: It is worth repeating that, in 2017, the Department brought forward regulations that would return the rate of return to 12%. In Westminster, it was reduced by 90% in order to return it to a 12% rate of return. We are almost in the situation where the answer is 12%, what is the question?

The Chairperson (Mr Brett): We keep mentioning the Grant Thornton report. Just to be clear, is 9·1p the tariff that is referenced?

Mr Trimble: I believe so, Chair, but it is on the RHANI website: rhani.org/news.

The Chairperson (Mr Brett): Was that the figure in that that has not been uplifted?

Mr Trimble: The Department did not move on that. The Department did not move on the previous —.

The Chairperson (Mr Brett): I know that, but is your 9·1p dated from the Grant Thornton report?

Mr Trimble: It is, from 2021, and would need to be adjusted by inflation.

The Chairperson (Mr Brett): Which would be what at this stage?

Mr Trimble: It would be almost in the region of comparison with the rate that is currently in payment to the cohort that was admitted into the GB scheme at the same time.

The Chairperson (Mr Brett): Can we just put a figure on the record? If you do not know, that is fine.

Mr Trimble: I would imagine that it would be north of 12p per kilowatt-hour.

Mr Hegan: We have had the 2021 consultation and the Cornwall consultation. I was cold-called by Cornwall Insight Ireland. I recognised what that was in relation to, and, at the time, given the circumstances, I was one of the people who refused to provide details to it. I think that every person in the renewables industry in NI who was contacted by it refused to do that, which gives an indication of the feeling about the Cornwall report in itself.

There was the Cornwall report. There was the 2021 consultation. The association provided a response that included the Grant Thornton report. Individually, as a business, we provided a 30-page, 5,000-word consultation response with 42 citations. What we are saying, and it comes back to due process, is that we would like to hear what the Department has to say in response to the consultation. We are sitting here before a Committee and being asked questions, and, arguably, we are doing it with one hand tied behind our back because we have not had sight of the consultation report.

Mr Martin: Mention was made of the alternative of people being forced to switch back to fossil fuel if there is not a viable tariff in place. That is at a time when the Assembly has enacted climate legislation with targets. The letter from Minister Poots that was referenced identified that, potentially, a 6% to 7% reduction in greenhouse gas emissions was achievable through RHI by 2030. It is about trying to square that circle and making sure that we are moving in the right direction towards achieving the targets that the Assembly has set.

Ms McLaughlin: One reason for your being here today is that the Committee felt that we needed to hear directly from you about the proposed targets that were put before us two weeks ago. There was an indication from the Department that boiler owners would benefit to the tune of around £5,000 per annum. You have argued that the amount will be much lower than that. The other area of concern was that publication piece. As a scrutiny Committee, we were concerned that we were doing all this with our hands tied behind our backs, as well.

I want to understand why you think, first, that you will not benefit by that £5,000. Will there be differentiation depending on how each individual boiler owner uses their boiler; say, if you are using yours seasonally and others are using theirs full time? It is a very complex scheme. As a Committee, we are even trying to get our heads around the historical context of it. We are really aware that there are customers and constituents out there who have been very badly burned — forgive the pun — financially by all that. We want to do them justice, but we need to do it with insight.

Can you explain the £5,000 per annum to me? We were told, "Accept this now, and you will benefit really quickly. You will get that money. We can do that. It will turn on, and you will get your money. You will get £5,000 by November if you accept those tariffs". Can you tell us how accurate that is so that we can question the Department when it comes before us?

Mr Trimble: Chair, I will lead off on that. The payment schedule is based on hours run. It is capped for a year for a small boiler at 400,000 kWh. Many of the boilers were installed in the summer of 2015. Therefore, under the 2017 regulations, many of those boilers had used up their 2017-18 allocation, in terms of hours and funds, by the date of enactment of the legislation. That was how ridiculous that retroactive piece of legislation was. That was the effect of it.

To introduce a different tariff for the final five months of the financial year will interact with when a participant's accreditation anniversary started. I do not have full sight of when that is, but if, for example, you are a high energy user — you run a system in a care home, where you have to provide heating and hot water 24/7 — you may have used up your allocation for 2024-25 already. Therefore, the benefit of the increased allocation, if you have not hit the 400,000 kWh cap, is 1·2p. If you have hit the 400,000 kWh cap, your benefit is zero.

This is not the winter fuel payment. In any case, the payments are made by Ofgem at the end of the quarter of the reporting period and six weeks in arrears. Hiking the tariff on 1 November will not result in money by Christmas or money this winter. If the appropriate conditions apply — only if they apply — there will be a minor uplift in March or April of next year. It is wrong to represent it as a winter fuel payment; it simply is not.

Mr Hegan: The association filed an FOI request with Ofgem in 2017. The figures that were produced from that — bear in mind that we are now in 2024 — showed that the average boiler in GB with a run-of-the-mill 12% target would generate a tariff payment, based on the average usage, in the region of £15,000. Now, if you fast-forward to 2024, it is probably up at £17,000 or £18,000 — maybe £20,000 — with inflation kicking in. It is hard to say that a boiler in GB will generate 12% and a boiler in NI will generate 12%. The numbers are so drastically different that it is phenomenal. I do not have the figures in front of me for the Republic, but I have seen them, and I believe that they are in the region of €30,000. Going back to the Carol Vorderman point, I will leave that with the Committee.

Ms McLaughlin: Thank you.

The Chairperson (Mr Brett): One other thought has come to my mind. How much would the scheme cost to operate if the tariff outlined in the Grant Thornton report were introduced? The Department's view is that the revised tariff would cost around £15 million a year.

Mr Trimble: Chair, I think that you are conflating two reports from the Department. It currently spends £5 million per annum. The Department would not answer my FOI enquiry, but Ofgem returned a response of under £3 million per annum. It is simple maths to say that, if we triple the tariff, we will triple our liability, but that is not the case, because it is a needs-based tariff. At this point in the year, it is historical, so I have no idea. It is cheaper to run fossil fuel, so most of the cohort of 2,124 boilers are currently switched off, and people have already moved to fossil fuel. It is impossible for me to answer the question, but I can say with certainty that it is not three times the supposed liability, because the supposed liability is only £3 million.

Mr Hegan: I will add that, in Ireland and GB, budget cap legislation applies, which means that the budget cannot be exceeded. Exactly what would happen in those circumstances is buried in the legislation, but, ultimately, the line is that the budget cannot be exceeded. We are in favour of that, are we not?

Mr Trimble: Absolutely. There is a resolution to the problem through backdating the liability to 2020 or 2019, but that could only be delivered over a multi-year strategy.

The Chairperson (Mr Brett): The Department is not asking the Committee to look at that.

Mr Trimble: But there is history, Chair, if I may interrupt —.

The Chairperson (Mr Brett): I know, but I am trying to make the point that, regardless of the merits or demerits of the proposals before the Committee, the Department has asked us to give a view on whether to allow the statutory rule to come to the Assembly for wider discussion and debate. I am trying to tease out this point, which I will also tease out with officials: given the draft proposals that are before the Committee, should the Committee not consent to the statutory rule being brought to the Assembly?

Mr Trimble: I believe that the Committee would be stepping into danger if it were to consent.

The Chairperson (Mr Brett): Why do you think that it would be stepping into danger?

Mr Trimble: Because it would be procedurally unfair.

The Chairperson (Mr Brett): By the Department or the Committee?

Mr Trimble: By the Department.

The Chairperson (Mr Brett): David, do you want to come back in?

Mr Honeyford: I was going to follow up, but I am good.

The Chairperson (Mr Brett): OK. Gentlemen, we really appreciate that. It is obviously a complex issue. Regardless of what the Committee decides today, it will continue to be a long-running issue, dealing with historical and future matters. Thank you very much for your representations, which have been very useful.

Mr Trimble: Thank you. I repeat that, if the Committee has any requirement for further evidence during its deliberations, we will be happy to provide it.

The Chairperson (Mr Brett): Thank you.