Renewable Heat Incentive Inquiry examining botched energy scheme
Former DETI energy boss Fiona Hepper returns for further 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, AFPThe inquiry's wrapping up early today at the request of chair Sir Patrick Coghlin.
Mr Scoffield has packed a lot in this morning and it's felt that any further grilling of Ms Hepper might be done without the need for another personal appearance in the Senate chamber.
The cast is due to reassemble next Tuesday morning at 09:45 sharp - join us then, and in the meantime have a great weekend.
Mr Mills was "appreciative" of getting as comprehensive a handover as he was provided with, says Ms Hepper because "it would not be normal" to have received such a degree of detail when arriving in new post.
Image source, Getty ImagesShe says she offered further advice to him if he wanted it, but he never took her up on that.
He also had a "very experienced team" remaining in place at the department's energy division, she adds.
There is "no set process" for handovers between managers in the civil service, says Ms Hepper.
She insists it "was my idea" to put together a handover note because "I thought it was a big job", and that instead of preparing a document for Mr Mills she could just have met him for a discussion if she had wanted.
Image source, Getty Images"It was not an encyclopedia - it was a high-level view of what a senior official would need to know on Day One to get them started."
She says it's "difficult" for her to accept in that context that her note is now being scutinised for "what's left out rather than what was given".
"I was trying to cover a vast range of information to give a good flavour of the depth, breadth and challenges of the post."
Ms Hepper left DETI in November 2013 and and gave a handover note to Mr Mills, who took over her job the next January.
Handover notes have already come under the microscope in these evidence sessions, with RHI scheme team official Peter Hutchinson's handover document highlighted earlier this week.
Image source, RHI InquiryMr Scoffield observes that there are four important issues do not appear in Ms Hepper's handover note - they are:
No arrangements, resources or plans were in place for a review of the RHI scheme when Mr Mills succeeded Ms Hepper as DETI's energy boss, according to his statement to the inquiry.
Image source, Getty ImagesHe's said that "given the complexity of such reviews preparatory actions would have been needed to be in place if it was seriously considered that a review should be carried out in 2014".
Ms Hepper insists the work on the review - including the preparation for it - was scheduled to begin in January 2014, after she had left the department.
Next on the agenda is the issue of the mandatory reviews of the RHI scheme.
A commitment was given in the scheme's business case for reviews to happen, and was a requirement of the project's approval from the Department of Finance and Personnel.
The first review was due in January 2014, with the recommendations put in place by March 2015.
Image source, RHI InquiryMs Hepper said in a witness statement that she estimated it would take six months to carry out the review.
Mr Scoffield says Mr Mills and the new members of the renewable energy team who took up their roles after she had left the department estimated the work envisaged for the review would take 16 months.
Ms Hepper says: "A review can be as long or as short as you want it to be, depending on what you want to cover."
In her written statement to the inquiry, Ms Hepper has said that if the cost controls that had been consulted on in 2013 had been introduced would've effectively prevented the RHI scheme's cost spiralling out of control in late-2015.
But the Department for the Economy - formerly DETI - takes a different view, saying that the budget control mechanism had a "weakness" and a "serious limitation" that would've affected how useful it could be.
Image source, Getty ImagesMs Hepper says it was "always to be the case" that it was to be an interim measure that would've at least provided a way of suspending the scheme.
It was to be followed up by work on another mechanism that was in place in the GB RHI scheme, which she says "should've been done" in 2014 after she had left the department.
Ms Hepper's successor as director of DETI's energy division has told the inquiry that the department's highest priority in relation to the RHI scheme when he arrived in the job was implementation of the domestic scheme, not the addition of cost controls to the non-domestic initiative.
John Mills said in his written statement that it was "far from being energy division's - and therefore my - priority".
Image source, Getty Images"There was no alarm bell ringing in relation to RHI costs or tiering or other matters of this nature," he added.
Ms Hepper disagrees, saying that cost controls had been included in a consultation document and adding: "It would have been a final decision for the minister."
In November 2013, a submission to Mrs Foster suggested that DETI could get the domestic RHI scheme opened the next spring and the cost controls for the non-domestic initiative could be held for later.
Image source, Getty ImagesThat was because the department believed the domestic scheme didn't need to go through the time-consuming process of gaining approval from the European Union under regulations for state aid for businesses.
It later transpired that that was incorrect, and it would need the go-ahead from the EU because it was open to landlords.
In January 2013, DETI's energy team realised that the second phase of the RHI scheme - including the addition of cost controls and the opening of the domestic scheme - was unlikely to happen by its target of summer that year, and it nudged the timeline back to the autumn.
Image source, Getty ImagesMr Scoffield asks whether, when officials realised things were not moving as quickly as they'd hoped, they considered getting the cost controls sorted first and setting the other aspects to the side.
Ms Hepper says the view then was to "do this as a package" but her view now is that cost controls could've been done separately.
Dr Keith MacLean returns to issue of lack of human resources at DETI with a bit of a humdinger.
DETI's team working on the RHI scheme amounted to one-and-a-half full-time posts - Peter Hutchinson and Joanne McCutcheon.
"I know you probably won't have seen this," Dr MacLean says, before revealing that the National Audit Office (NAO) has published a report on the GB RHI scheme this morning, external.
Image source, National Audit OfficeHe paraphrases the NAO's observation that: "Due to the limited resource in DECC (the Department for Energy and Climate Change) - 77 people - they had delayed the introduction of the domestic scheme to concentrate the limited resource on cost controls."
Ms Hepper says DETI knew DECC had slippage on the GB domestic scheme but they weren't sure why.
The NAO report has found that the GB scheme did not represent value for money but that its cost controls did allow it to avoid the catastrophic budget control problems experienced in Northern Ireland.
The lack of a mention of cost controls in the internal papers "may have led to a feeling or a misunderstanding" that the issue "didn't matter too much", suggests Mr Scoffield.
But Ms Hepper disagrees, saying that whenever she left the department she made her successors aware of the need for the cost controls to be added to the RHI scheme.
Image source, RHI InquiryShe says that even if the domestic RHI scheme that had been planned was launched first, the cost controls would've had to go hand-in hand with it.
Ultimately, the budget protection measures didn't materialise.
Internal documents from 2012 and 2013 suggest that the addition of cost controls to the RHI scheme "didn't seem to be front and centre" for DETI, says Mr Scoffield.
DETI had initially planned for three issues to be addressed by summer or autumn 2013 - they were:
Image source, Getty ImagesBut Mr Scoffield outlines numerous papers - including some sent to Mrs Foster and the assembly's Enterprise Committee - that make no mention of cost controls as part of the scheme's next phase, and asks why the issue isn't emphasised.
Ms Hepper maintains it was "always a key part" of DETI's work and simply wasn't mentioned in the papers because they dealt with "outward-facing" matters.
"It was there front and centre - the minister knew it was coming; [her adviser] knew it was coming; we were working on it."
Dr Keith MacLean queries why expert consultants were hired to work out whether the 10% renewable heat target would be met but their "significant messages" that it wasn't possible weren't passed on to the minister.
"[They] were saying it's simply not possible now because you've started [the RHI scheme] so late, your budget's not enough... - not one single scenario... got you near to the target."
Image source, Getty ImagesHe wants to know what would've had to happen "to trigger that fairly normal action" of informing the minister.
Ms Hepper says the consultants' report was read by Mrs Foster's adviser Andrew Crawford, and officials considered it still to be "early days" in the lifetime of the scheme and were looking to see how many applications would be made in the months that followed.
The RHI scheme was at least partly set up in response to the setting of a target for 10% of Northern Ireland's heat to be produced by renewable sources by 2020.
But a report by external consultants commissioned by DETI in June 2013 showed that the target was not going to be met.
Ms Hepper says the department "always thought it would be a stretch" and knew the RHI scheme wasn't going to achieve the target on its own.
DETI officials didn't tell the minister or the Northern Ireland Assembly's Enterprise Committee about that development, says Ms Hepper, because they wanted to get "more certainty around those figures".
From the outset, DETI said its RHI scheme would largely mirror the similar initiative running in Great Britain.
Interim cost controls were introduced in July 2012 in GB to ensure the budget wouldn't burst, but that measure was not immediately followed up in Northern Ireland.
Image source, RHI InquiryMr Scoffiield puts it to Ms Hepper that that amounted to "turning the risk management process on its head", by reacting to problems as they materialised rather than by planning well in advance to ensure they never became an issue.
Ms Hepper says DETI was "operating on the same pathway" as the GB scheme both in terms of interim cost controls and the digression mechanism it was planning in order to keep the budget on course.
The risk register for the RHI scheme was checked four times a year, Ms Hepper has told the inquiry in her written evidence.
But Mr Scoffield says a cover sheet on the register that should've been filled in when reviews were done was never completed, and so there is no record of the quarterly checks.
Image source, Getty ImagesMs Hepper says she doesn't know why the review log wasn't recorded.
She says it "would've been helpful" if one of the officials working on the scheme had filled it in.
The Department for the Economy - formerly DETI - has told the inquiry it hasn't been able to establish if there was any formal system for monitoring the price levels of biomass fuel before 2015.
Ms Hepper says the department had access to fuel price information from an industry source - the Sutherland Tables.
Mr Scoffield wants to know how it was missed that the fuel price was significantly below the level of the subsidy on offer through the RHI scheme - one of the key flaws that led to the massive overspend.
Image source, RHI InquiryThe witness says the understanding was that, while the fuel price was important, it was not a surprise that it was below the tariff level "because you had to add in all these other factors to it".
Inquiry chair Sir Patrick Coghlin notes that despite "all these lurid leaflets and the fact that lots of people knew outside, what that meant was completely lost on the department".
Ms Hepper confirms that was because of the officials' understanding of how the tariff was put together.
Civil servants working on the RHI scheme did not see a series of promotional leaflets from biomass boiler companies that outlined the initiative's overgenerosity as a way of selling their products, says Ms Hepper.
Among the slogans used in advertising campaigns by firms were "20 years of free heat" and "earn as you burn", and one company even produced a leaflet that explained a scheme claimant would collect £1,475 in a year if they spent £1,000 on biomass fuel.
Mr Scoffield says that demonstrates that there was an "awareness within the market that the scheme could be used in a way which was very lucrative".
Ms Hepper says that if DETI officials had seen the leaflets it would have been a "strong signal" to examine the subsidies on offer to see how those benefits could be achieved.
"I don't know how we didn't see some of the leaflets, but we didn't," she adds, saying that some of the companies that produced them had even been in contact with DETI about the scheme.
The inquiry's senior counsel David Scoffield QC picks up the questioning of Fiona Hepper.
You can find our coverage of her evidence to the inquiry yesterday here.
Image source, RHI InquiryHe's going to look at the RHI scheme's risk register.
The actions to be taken to manage the risks included ongoing engagement with industry stakeholders and liaison with the scheme's administrator Ofgem.