Renewable Heat Incentive Inquiry examining botched energy scheme
Former DETI official Peter Hutchinson returns for a full day's questioning
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
Image source, AFPMr Lunny wraps up for the day, and Mr Hutchinson is helpfully reminded that he'll be expected back tomorrow for another all-day session.
Join us again tomorrow morning with the usual motley cast of characters.
The curtain rises at 09:45.
In the meantime have a great evening.
Image source, PacemakerFormer DETI official Peter Hutchinson told the inquiry he "feels a bit sick" when he hears terms like "cash for ash" or "burn to earn".
They were used at promotional events in the early days of the scheme when installers used them to encourage investment.
Mr Hutchinson was one of the small group of civil servants involved in the RHI scheme at the time of its inception and he spent the whole day as the sole witness.
The inquiry also heard that a dispute over data sharing between DETI and the RHI administrators Ofgem meant that the department may have missed vital information over the use of multiple boilers by scheme participants.
Inquiry chair Sir Patrick Coghlin said officials dealing with RHI appeared to have been "grossly overworked".
He said it appeared they'd been left to get on with monitoring a "highly specialised and highly volatile scheme" without formal guidance.
Neil Elliott is a business man whose company supplies, fits and maintains renewable energy technology.
When he appeared at the committee earlier this month Mr Elliott said it was "widespread knowledge within the renewable industry that the incentive was too good to be true".
He attended a number of the promotional events and described some of the advertising leaflets.
Image source, RHI InquiryMr Lunny takes Mr Hutchinson through some of the promotional materials.
They include slogans such as "cash for ash".
Mr Hutchinson says he did not see leaflets that caused him concern in 2012 or 2013.
"I hear the terms 'cash for ash' and 'burn to earn' and stuff like that now and I feel a bit sick," he says.
Sir Patrick returns to the question of the promotional events and asks whether Mr Hutchinson was ever asked questions about the price of biomass that might have alerted him to a possible concern.
Image source, RHI Inquiry"No-one ever came up to me and said 'I'm making a fortune out of you' or 'you've got that completely wrong', or things like that," the witness says.
Mr Hutchinson has told the inquiry in his witness statement that he first became aware in 2016 that the subsidies paid were greater than the cost of the biomass fuel, and that this represented an incentive to produce heat to make a profit - the so-called "perverse incentive".
Mr Lunny puts it to him that he knew the tariffs and that, despite monitoring the fuel costs, he does not seem to have realised during the monitoring that the fuel costs "were substantially beneath the tariff level".
Image source, RHI InquiryMr Hutchinson says he would have been aware of the fuel costs and would have been aware of the tariff costs but he had not been aware that this was the cause of the perverse incentive until later.
"If someone had asked me what the price of biomass was I could have given them a broad range and have known that range was below the tariff level," he says.
Sir Patrick reminds Mr Hutchinson that he was on the ground at agricultural events in connection with RHI and he would have seen the promotional materials that were about.
"Sometimes you did two lectures a day, he says.
The inquiry has already been shown promotional material advertising "cash for ash".
"In those days I don't recall seeing anything that caused me a great concern. I think that changes into 2014," he replies.
"We were in a position where we wanted the scheme to be promoted."
Image source, RHI InquiryMr Lunny asks Peter Hutchinson whether DETI were getting enough information from Ofgem "to enable you properly to monitor the scheme".
"No," says the witness,"Looking back now if I had had the bits of information that we requested the issues might have been able to be identified quicker, and sooner and better.
DETI requested from Ofgem some quite specific data regarding RHI scheme participants.
This included names, addresses and industrial classifications.
There were problems regarding data protection, and despite numerous communications between DETI and Ofgem, and the involvement of lawyers, the problem was not resolved during Mr Hutchinson's time at DETI.
Image source, RHI InquiryMr Lunny asks how this information would have been useful to DETI.
Individual addresses would have been needed to draw attention to any issues regarding multiple boilers.
"If you had looked at it and said there's 10 boilers on the same address I think that would have caused a query," says Mr Hutchinson.
We're back from lunch, and Mr Lunny has some light reading for us in the form of the Ofgem annual report on the RHI scheme, published in November 2013.
This showed there had been 63 applications received with 40 to 45 approvals.
He notes some clear patterns emerging, for instance all 63 were for solid biomass boilers and "the lion's share" were for the medium tariff band of 20 to 99kW.
There is another trend showing a higher level of boiler efficiency than envisaged by CEPA in its tariff calculations.
Mr Lunny turns to a statement to the inquiry from DETI's successor, the Department for the Economy (DFE).
This considers the intelligence being supplied to DETI by Ofgem in its weekly monitoring reports.
It suggests that it could be seen from the reports that "divergence from the assumed load factors and the assumed size of boilers would have been apparent from as early as 2013".
Image source, Bank of EnglandThe DFE deposition says that these installations "would have locked in oversubsidies of hundreds of thousands of pounds over the 20 years of the scheme".
Mr Hutchinson says that when DETI started to see the figures indicating considerable numbers of 99kW boilers were being fitted they did not have the additional information to show that these were multiple installations.
"The only way we would have known that people were doing multiple boilers was when people phoned us up and said 'we're thinking of putting in five boilers in five premises' because we didn't have addresses for installations," he says.
He adds that he would have been reluctant to have provided definitive advice on the subject and that the RHI scheme's adminstrators Ofgem would make the ultimate determination.
Boilers up to 99kW were paid a higher subsidy than bigger boilers.
This meant it was possible for multiple boilers to be fitted in a single building thus generating a greater income.
Mr Lunny asks the witness whether he was aware of the risk posed by this.
Image source, RHI InquiryMr Hutchinson says his understanding was that the fitting of more than one boiler would be regarded as a single system "and the tariff would drop to whatever the combined capacity was. Now I'm aware that that was not what happened in practice".
The "tiering" of tariffs was deployed in the Great Britain RHI scheme as a form of cost control.
Mr Lunny wants to know whether Mr Hutchinson understood the triggering of tiering.
Was he aware that "if the tariff was higher than the cost of generating the unit of heat... tiering might be required?"
"I think my difficulty is trying to reconcile what I know now, and what I knew then, but I think that's fair," Mr Hutchinson replies.
He says they were relying on consultants CEPA for advice and that's why the need for tiering was missed.
Mr Lunny puts it to Mr Hutchinson that "there was no written plan as to how this scheme was going to be monitored as it ran?"
"Yes, I think that's correct," he replies.
Image source, RHI InquiryThe witness says he can see how things should have been done better in hindsight.
"I can sit here looking back over things over the last few weeks and just think how it could have been done."
Mr Lunny turns to the thorny question of the monitoring and review of the non-domestic RHI scheme.
Assurances that regular monitoring would be carried out were given to the public in the consultation document, to the RHI casework committee, in the business case given to the Department of Finance, and in the EU state aid application.
Image source, RHI InquiryMr Lunny demonstrate from the European Commission document granting state aid approval that monitoring was intended to be a key aspect of the scheme's administration.
He also quotes from written evidence given by Joanne McCutcheon:
"Day in and day out we knew that this scheme was based on a huge range of assumptions and had to be very, very carefully monitored."
Inquiry chair Sir Patrick Coghlin puts it to Mr Hutchinson that he was "grossly overworked" during his involvement with the RHI scheme.
He says that what worries him is: "Where was the leadership?"
Image source, RHI InquiryMr Huthchinson says his immediate superiors, Joanne McCutcheon and Fiona Hepper "were always very good to staff members, and always made the case for extra resources".
Mr Lunny raises the question of lack of staff resources at DETI - a live issue throughout the inquiry.
From November 2012, Mr Hutchinson had additional responsibilities for RHPP, a household grant scheme for renewable heat.
"Do you think you had adequate human resources in renewable heat branch to deal with all of the RHI issues that you had to address," Mr Lunny asks.
Image source, RHI Inquiry"At the time you just got on with it it," Mr Hutchinson replies.
"Certainly additional people would have helped, and certainly where we're sitting now they would have helped," he adds.
Panel member Dr Keith MacLean is concerned that the possibility of an increase in the projected cost of RHI that emerged between the first CEPA report of 2011 and its addendum in 2012 was not adequately taken under notice
"I find it difficult that if there is discussion of cost increases of over £100m that doesn't trigger conscious activity," he says.
Image source, RHI InquiryMr Hutchinson says this is a fair comment and that "without a clear memory it is difficult to comment on it".
Image source, RHI InquiryMr Hutchinson has already taken the oath, so junior counsel Donal Lunny gets straight down to work.
He explains that the questioning today will involve Mr Hutchinson's involvement in the RHI in the period November 2012 to May 2014.
An independent inquiry into the RHI scandal was established in January 2017 by the then finance minister Máirtín Ó Muilleoir.
He ordered it in the wake of the huge public concern what was then a developing political crisis surrounding the scheme.
Image source, PacemakerThe RHI Inquiry began in November and Sir Patrick Coghlin (above), a retired Court of Appeal judge, is its chair and has been given full control over how it will operate.
It will look at:
For more information on the RHI Inquiry,you can read our handy Q&A.