Renewable Heat Incentive Inquiry examining botched energy scheme
Former DETI energy boss Fiona Hepper returns for 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
It's been a high-pressure day for Ms Hepper at the inquiry with a lot of fine detail covered.
Mr Scoffield reckons he's made good progress, but Ms Hepper may have to come back next week.
Image source, AFPIn the meantime, Sir Patrick and the crew of the good ship RHI will reassemble at 09:45 tomorrow morning for another voyage into the unknown - do join us for our coverage.
Have a great evening...
It is "difficult to see where the leadership was" at DETI, says Sir Patrick Coghlin, particularly when it came to staffing issues.
There was just one full-time member of staff, with two others working part-time.
The chair suggests that the department's permanent secretary could have allocated more staff to Ms Hepper's energy division.
Image source, RHI Inquiry"There was work coming at us all the time," she says, adding that she told her successor that such was the breadth of her job she was having to do work six or seven days a week on it.
"That sort of workload should've been known to the permanent secretary," says Sir Patrick. "It's not right to require people to work at that level."
In spite of the seemingly endless hours she faced, Ms Hepper says she "enjoyed my work and it was something I took a pride in".
Ms Hepper comes in for some vigorous scrutiny from panel members.
Dr Keith MacLean says the risk register for the RHI scheme "looks like it went into a drawer and that was it".
The witness denies this, saying that it was reviewed at least quarterly.
Image source, Getty ImagesSir Patrick says her junior colleague Peter Hutchinson's detailed handover note to his successor included the terms "urgent and immediate action" regarding a review of the scheme.
He notes that Ms Hepper's handover note to her successor John Mills includes less than two pages about the initiative.
She says she was handing over an entire division of work and her note was on a strategic level.
It had been envisaged that an administration board would be set up between DETI and Ofgem to monitor and control the RHI scheme.
It was to meet on a regularly, assess risks and make adjustments to keep costs under control, and Ms Hepper says it was Ofgem's responsibility to establish it... but it never materialised.
Image source, Getty ImagesShe says, however, that there was a lot of "structured" director-level contact between DETI and Ofgem, which effectively fulfilled the same function as the formal admin board would've done.
She believes nothing was missed in those meetings that could've been dealt with by a board, adding that had a formal arrangement been in place the sames people would've been round the table.
But Dame Una says vast her experience of working in the civil service tells her that formal structures are more effective when it comes to "new and innovative" projects, like the RHI scheme was.
In 2013, a problem arose involving the eligibility for the RHI scheme to applicants who had previously received a loan from the Carbon Trust, a body that promoted low-carbon technology.
That was the issue that crystallised the dispute over who was entitled to interpret the initiative's regulations.
Two applicants with Carbon Trust loans were accredited to the scheme but later applicants were refused on the basis that people could not be in receipt of both RHI payments and the loans.
Ms Hepper says the problem lay with the "inconsistency" of Ofgem's approach - that it had initially applied the GB RHI regulations but subsequently switched to the NI regulations.
In response, Ofgem's Keith Avis effectively said DETI had signed away its responsibility under the regulations of the RHI scheme to the administrator.
Ms Hepper says that's not what DETI's legal advisers believed.
Image source, Getty ImagesSir Patrick says it would've been interesting to see the legal advice on which Mr Avis's email was based.
Mr Scoffield explains that Ofgem's motivation could be that it wants to "jealously and zealously guard its independence" from government.
Ms Hepper says that the "layfolk" at DETI didn't believe Mr Avis's email had any merit.
A few months previously, the data wars were in full flow, as shown in an email Ms Hepper sent to Ofgem in January 2013.
"It seems completely bizarre that that if we were to terminate the agreement you would provide us with the information as previously agreed but you will not share it while the arrangement is in place," she wrote.
Image source, RHI InquiryShe goes on to suggest that changes could be made so that applicants would have to apply through DETI in the first instance.
"Was that a serious suggestion?" Mr Scoffield asks.
Ms Hepper says "it was a shot across the bows".
In terms of who owned the data regarding the RHI scheme, the views of lawyers for DETI and Ofgem "conflicted significantly", according to minutes from a meeting in May 2013.
Image source, Getty ImagesIt was the view of civil service solicitors that DETI "owned all the data" and they also believed Ofgem was acting on the department's behalf and data therefore "could and should be shared".
Ofgem said it was willing to "share information and data as long as requests were reasonable and had a purpose".
Ofgem's view is that the reasons given by DETI for accessing information did not include the monitoring of the RHI scheme.
The reasons given in an email sent to Ofgem by Ms Hepper in July 2013 included: "For the briefing of our minister - Northern Ireland is a small place and our minister regularly asks about individual companies."
Sir Patrick isn't convinced: "It's very difficult to see how the minister's personal curiosity stemming from the small size of Northern Ireland would begin to be a valid reason."
Image source, RHI InquiryMr Scoffield asks if Ms Hepper can remember any of the companies Mrs Foster had asked about, and she says one of them is Sheridan & Hood - the inquiry has heard from the director of that firm, Brian Hood (above).
Panel member Dame Una O'Brien says the obvious reading is that Ms Hepper was under pressure to ensure that specific companies were accredited on the scheme.
"Absolutely not," responds Ms Hepper, adding that Mrs Foster was not involved at any time with the accreditation process, which was left to Ofgem.
Ms Hepper says she "couldn't understand" why Ofgem was reluctant to provide a greater degree of data on the RHI scheme than it was doing.
She "wanted further information" on the applications that were being approved, what industrial sector they were coming from, especially as the number of claimants on the scheme rose.
"I think that would've been helpful in spotting some of the issues coming forward."
Image source, RHI InquiryIn its evidence to the inquiry, Ofgem has said DETI received the same level of information as DECC did in relation to its RHI scheme in Great Britain.
It also said DETI didn't want more information than DECC was receiving because there would've been an extra cost with that, and the department wanted to keep its spend down.
The issue of data-sharing between Ofgem and DETI is next to be examined by the inquiry.
Ms Hepper says that when DETI asked for names and addresses of scheme participants Ofgem felt that was potentially a breach of data protection law.
She agrees that there was "a difference of view" over the ownership of the data.
Image source, Getty ImagesDETI wanted to have postcodes, industry classifications and addresses.
Ms Hepper understood that an agreement had been made in principle in May 2013 to start supplying the information, but that had not begun when she left in November.
She says she was frustrated because it was "our scheme, our data, something fairly simple, which they said we could have" that was caught up in "legal loops".
DETI's internal auditors and the Northern Ireland Audit Office (NIAO) wanted full audit access to material held by Ofgem in relation to the RHI scheme.
The NIAO wanted access in order to "follow the money" to ensure that the right amount of subsidies went through Ofgem and ended up with claimants who were entitled to it.
Image source, Getty ImagesThe internal auditors also had to be "satisfied" with their level of access, Ms Hepper says should "couldn't and wouldn't sign until that point" was reached.
The audit access was the last "major issue" to sort out with Ofgem before the admin arrangements agreement could be signed by DETI.
Image source, Getty ImagesMuch more from Ms Hepper after we all get a bite to eat. Join us again from 14:00.
It emerges that Ofgem set its own key performance indicators (KPIs) for the RHI scheme.
"The issue was this issue of independence - they did stand firm on that", says Ms Hepper.
Image source, RHI InquirySir Patrick observes that, to put it mildly, "that was a little risky".
When Ms Hepper tries to draw comparison with the private sector, Sir Patrick has a quick riposte: "With a private sector you would have had the right to fix the KPIs."
Ofgem said it had a "legal requirement to operate independently from government", but Ms Hepper said she found that difficult given that it was providing a service to DETI.
Inquiry panellist dame Una O'Brien says it is "pretty extraordinary" that DETI was "reduced to the status of a stakeholder in your own scheme".
"It's DETI's budget; DETI's scheme; you've designed the scheme; the regulations are owned by the assembly; this is a ministerial priority," she adds.
Image source, RHI InquiryShe asks if it was ever raised with the department's permanent secretary that it was a "fundamental design issue" in the relationship with Ofgem "which is going to get in the way if we don't sort it out".
Ms Hepper says she "continued to rock the boat for quite some time", and the department and its legal advisers "held firm" to its position.
She said DETI felt it wasn't going to find an agreement with Ofgem on the matter but would have to look for a way around it and took the view of "let's make this work".
Now to the second of Mr Scoffield's bullet points - Ofgem's key performance indicators.
Ofgem's primary role is as the regulator of gas and electricity markets in Great Britain, but a subdivision - e-Serve - provides admin services for energy projects, as was the case with the RHI scheme.
According to Ms Hepper's written evidence, she said the administrator thought it should not have to report to DETI as it was an independent regulator.
Image source, Getty ImagesMs Hepper says she found that concerning as Ofgem was not the regulator for Northern Ireland, adding that "we had a different view" but it did not get in the way of delivery of the scheme.
Sir Patrick wants to know how Ofgem was described in the agreement between the two parties - was it a regulator or an administrator?
The term used was "market authority", and the inquiry chair says the difference in understanding over Ofgem's standing was "a recipe for trouble".
On the back of the questioning on Ofgem's development costs, Mr Scoffield asks if Ms Hepper had any impression that the administrator had been "cutting corners" on running the RHI scheme.
Applications for the Northern Ireland I scheme were being turned around much quicker those to the similar initiative in Great Britain, which Ofgem was also administering.
Image source, RHI InquiryMs Hepper suggests it may have been because Ofgem was making use of its GB scheme experience to good effect.
She had no concerns, nor did she have any evidence of corners being cut.
Ofgem had originally estimated that the administration development costs for the RHI scheme would be "£386,000, plus 100% contingency" but by late August 2012 it indicated that the total would be about £700,000.
That prompted what has been described as a "furious" email from Ms Hepper to Ofgem, after which Ofgem dropped the projected costs to just over £430,000.
Mr Scoffield asks whether Ms Hepper had concerns that "Ofgem was essentially picking figures out of the air".
Image source, Getty ImagesThe witness says she "certainly had questions" and the Ofgem official she was dealing with was "caught on the hop and they had to work through what were the actual" costs.
Within two days he came back with the reduced figure a and Ms Hepper says she was "content" with that, even though it was higher than the original figure - it was justified because of delays on DETI's side.
"We did reach a resolution on a figure that was much more acceptable."
The RHI scheme opened before agreement had been reached with Ofgem on administering it.
Ms Hepper says "each and every one" of the issues that were proving to be contentious were "resolvable" and the department was trying to "find the right route" by which to do that.
Mr Scoffield says it wasn't "ideal" for the scheme to open before those problems were ironed out, and asks if the "speed that was required" to get it up and running was the "driving factor".
Ms Hepper says DETI had a "line-in-the-sand date" and was doing everything to get it opened in November 2012 while also working through the issues with Ofgem.
Mr Scoffield suggests that Ofgem had the department "over a barrel" as it was the only body that could realistically administer the scheme.
Ms Hepper says she never had the impression that Ofgem "felt that they had the whip hand".
There was a sometimes rocky relationship between DETI and the RHI scheme administrator Ofgem, and Mr Scoffield outlines six points of contention:
Image source, RHI InquiryMs Hepper agrees that these were the key issues.
But she adds: "I would put it more in terms of discussion and trying to lead towards resolution rather than frictions and tensions."