Design of botched scheme outlined to Renewable Heat Incentive Inquiry
Ofgem - administrator of the RHI scheme - gives evidence to inquiry
Inquiry set up after public concern over scheme's huge projected overspend
Retired Court of Appeal judge Sir Patrick Coghlin chairing inquiry at Stormont
Public evidence sessions expected to last until well into 2018
Mr Scoffield comes to the end of his questioning for today, with the unfortunate Mr Avis being told he'll have at least another full day in the hotseat at a time as yet undecided.
Another Ofgem official, Matthew Harnack, takes the stand tomorrow morning, with kick-off at 09:45, so join us then.
Have a great evening!
It "seemed important" to Ofgem to get DETI to accept the legal risk for the RHI scheme, says Mr Scoffield.
Image source, Getty ImagesIn an email to Ofgem on 28 May 2012, DETI's Joanne McCutcheon confirmed that the department would be liable for the risk, and Mr Scoffield wants to know why the adminsitator was so keen to get that guarantee.
Mr Avis says Ofgem wanted to know "exactly where we were" because if DETI didn't accept the risk there would be "some debate... between us".
When the Ofgem team met in May 2012 the question arose of whether or not DETI had received the legal review that should have been passed to the department in late 2011.
This included a table of recommendations or "corrective amendments" for its RHI scheme regulations.
Image source, RHI InquiryInquiry panellist Dame Una O'Brien is concerned about the handover Mr Avis received when he came into post and the lack of "project infrastructure".
"Perhaps there wasn't the project documentation that you could have turned to," she says.
Mr Avis says that's "a fair point".
DETI planned for its RHI scheme to largely mirror the similar GB initiative, which was being run by Department of Energy and Climate Change (DECC).
But it decided that some crucial amendments were being made to the GB scheme, including the addition of cost controls, would not be added initially, and would be revisited at a later date.
Image source, Getty ImagesOfgem's legal adviser Marcus Porter emailed his colleagues in spring 2012 to say he had concerns about DETI's intention, saying that it would be "knowingly reproducing legislation" that had "considerable scope for improvement".
As a result, he said the same "knotty legal issues" that arose in the GB scheme would occur in the Northern Ireland initiative.
DETI was "very keen to press forward as quickly as they were able" to on getting the RHI scheme open, according to Mr Avis.
So, what level did "the desire for breakneck speed" come from", asks Mr Scoffield.
The witness says had the impression it was coming from "high, high up in the organisation".
Image source, ReutersThe senior counsel presses him: "Are you talking about the level of Fiona Hepper, or permanent secretary, or minister?"
Mr Avis says he thinks at times there was direction "right at the top at ministerial level that there was a need to move forward quickly" - the minister at the time being Arlene Foster.
This morning's witness, Ofgem's Catherine McArthur, also said she sensed that "someone was putting on the time pressure".
DETI gave Ofgem the go-ahead at the start of May 2012 to set up its administration of the RHI scheme.
Mr Avis told the department it would take up to six weeks to set his team up and the development phase would last for four months, and on the back of that information DETI aimed to open the scheme by the end of that September.
DETI's energy team boss Fiona Hepper said that the cost of £386,000 set out in Ofgem's feasibility study should be regarded as a "ceiling" for the work... but remember there was a 100% contingency budget with that.
There was "quite a bit of contention" that summer over the costs, according to Mr Scoffield
Mr Avis says Ofgem tried its best to keep the costs down but he acknowledges that there could've been a time when it "suddenly dawned on us" that it was working to the bigger budget, while DETI was looking at the lower one.
The next witness from Ofgem is Keith Avis, who was the manager responsible for the RHI scheme from April 2012 to February 2013.
Image source, RHI InquiryHis team's role was to put in place the procedures for the scheme's operation.
You'll find his witness statement to the inquiry here, external.
DETI had set "unrealistic timeframes" and had a "lack of understanding" of what was involved in getting the RHI scheme up and running, says Ms McArthur.
She says that when she was working with DETI's core two-person team that was focused on setting it up she felt there was someone else "putting on the time pressure and was making the decisions".
Image source, Getty ImagesShe felt the scheme was "in somebody else's hands" than those of the two DETI officials - Peter Hutchinson and Joanne McCutcheon - most deeply involved in it.
With that comment, Ms McArthur's evidence comes to an end.
Returning after lunch, the inquiry examines a risk register document that Ofgem drew up to go alongside its feasibility study into the RHI scheme.
It outlined a number of issues that Ofgem had identified with the initiative and how to solve or at least mitigate them.
Image source, Getty ImagesAmong them was a number of risks that were described as "major", including one about the scheme's regulations at the time possibly not being "fit for purpose", which could lead to legal challenge.
Mr Scoffield says the list of risks was a "fairly detailed" one but the inquiry has so far not seen evidence that it was "used in the way in which it was intended".
Image source, Getty ImagesMs McArthur has a few more questions to answer after the lunchbreak, so we'll be back at about 14:00.
There was a "high risk" that the RHI scheme was not going to be fully ready in time for its planned opening on 1 April 2012, Ofgem noted.
Ms McArthur says that when Ofgem produced its feasibility study it had noticed "slippage from DETI in terms of timeframes".
Image source, Getty ImagesShe says that if the deadline was missed there was a chance that Ofgem would've had to increase its costs for DETI.
"It was important that... we made clear to DETI that the timeframes were very ambitious and any delays could risk having a scheme ready to launch," she adds.
Ofgem said its proposed monitoring board could "proactively make adjustments to the scheme".
That would be a safer bet than "taking a reactive approach should scheme costs grow beyond the proposed budget".
Image source, Getty ImagesMr Scoffield says that "knowing now what we know as to what happened" with the initiative, that "does seem to be prescient".
The suggested board, as the inquiry's heard before, was never set up.
Mr Scoffield notes that mechanisms to prevent the RHI scheme's costs running out of control were touched upon in Ofgem's feasibility study.
There were no controls in place in the GB initiative in the event that uptake of the scheme was considerably higher than anticipated.
Image source, RHI InquiryOfgem suggested to DETI that a joint administration board should be established to help keep an eye on the RHI scheme, scrutinising and controlling its operation, costs and uptake.
Ms McArthur explains that it would allow DETI "to be able to get regular updates on application volumes and what that would mean for costs".
There was a high level of uncertainty about Ofgem's estimated cost to administer the RHI scheme, Ms McArthur agrees, but she believed the figure "to be accurate".
Inquiry panellist Dr Keith MacLean queries given that accuracy claim there was a 100% contingency added on to the projected £386,000 cost.
Image source, Getty Images"That doesn't fall into my description of accurate... with those degrees of variability," he adds.
The witness agrees that it was more an indicative range given that Ofgem still didn't know the details of the final policy behind the initiative.
She suggests that what Ofgem was being asked to do was like a builder being asked to build "either a house or a table - there was a high degree of uncertainty".
The inquiry panel is unhappy with the way Ofgem made its cost calculations.
Dame Una returns to the Ofgem's counterfactual of DETI setting up its own, completely independent scheme.
Image source, RHI Inquiry"It stretches the imagination too far from the way organisations actually work," she says.
Ms McArthur replies: "I think that's right and I don't think it was ever intended as a realistic option."
The estimated admin costs of the RHI scheme and how they were calculated are next on the agenda.
Mr Scoffield says Ofgem's figures they demonstrate "extremely significant savings" could be made if DETI used Ofgem to develop the scheme using the GB RHI arrangements.
Ofgem estimated that the total development costs of a freestanding NI system "could range from £3.2m to £5.15m".
Image source, RHI InquiryBut by modelling the NI RHI closely on the GB system and utilising Ofgem's existing systems and staff, the cost "is estimated to be £368,000", about 10% of the alternative.
Inquiry panel member Dame Una O'Brien puts it to Ms McArthur that these were "not real savings" but were based on the alternative that Northern Ireland would set up "a completely independent admin system".
The witness confirms that: "The counterfactual would be if Ofgem were to set up exactly the same scheme administration team and all the systems required to support that independent of what we had done for the GB Scheme."
Ofgem had identified some "critical" weaknesses in the GB scheme, on which the Northern Ireland initiative was party based, and it laid out options for what DETI culd do to address them.
The first was the DETI could introduce its scheme and make changes in line with amendments that would eventually be made to the GB initiative, but it said this could be a "reactionary" way to do things.
Image source, Getty ImagesThe other was that DETI could be "proactive" in fixing the issues before the scheme opened, making it "robust" from the outset but that could mean it would then differ from the GB initiative.
Ms McArthur remembers that there was "uncertainty" from DETI and did not give Ofgem a firm answer either way at that stage about what it would do.
DETI had a "very clear priority" for the RHI scheme to be operational from 1 April 2012, says Ms McArthur.
She describes that as a "short" timeframe but felt that was a "achievable" if the department had gone with a scheme as lose to the GB initiative as possible.
Image source, Getty ImagesThat's because Ofgem was already administering the GB scheme.
But she felt that the more differences DETI wanted to there to be between the schemes would make it a difficult deadline to meet.
Image source, RHI InquiryTo the unschooled eye, one fascinating aspect of the inquiry has been watching Mr Scoffield navigating his way through great rafts of written evidence.
Today, he's got a box of files the size of a small fridge on the desk beside him... did they wheel it in on a trolley?
DETI said that "some local political issues" could impact on how the RHI scheme would work and there was an "imperative to differentiate" its initiative from the similar one in GB, according to Ms McArthur.
Her comment was made in a briefing for an Ofgem colleague in November 2011.
Mr Scoffield asks whether she thinks DETI felt it had "to be different for different's sake" or whether it had to try to justify why it did not join the GB scheme.
Ms McArthur believes that DETI "concern" that if had gone ahead with a scheme of its own that was "virtually identical" to the GB one there would have been "criticism" for not just joining the actual GB scheme in the first place.