Renewable Heat Incentive Inquiry examining botched energy scheme
Senior Ofgem administrator Gareth John answers questions from the 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 Aiken tucks in his metaphorical t-shirt and today's participants stream out of the Senate chamber into the early evening sunshine.
We'll be back tomorrow with more live coverage of the RHI Inquiry, when Ofgem technical expert Dr Edmund Ward will be joining us again.
Kick-off is at 09:45 so do join us then.
BBC News NI
Civil servants at DETI tried to suspend the RHI scheme as the "penny dropped" that the budget was under huge pressure, the public inquiry was been told.
They asked the administrator Ofgem to "queue" new applications while they worked out the budget position.
Image source, PacemakerOfgem was worried that the bill for its work might not get paid and also had concerns that it had commitments to scheme applicants and might end up getting sued.
DETI's request to pause the applications came when it's monthly payments to scheme claimants had gone from £264,000 in March 2014 to £1.5m in June 2015.
In August 2016, a member of the Ofgem's counter fraud team sent an email to the RHI scheme operations manager Teri Clifton seeking approval for a letter to claimants who would be under fraud investigation, requesting information from them.
It was greeted with great amusement by the scheme management team, who felt it acted almost as a tip-off to claimants.
Image source, RHI InquiryWhen it was passed to Mr John, he emailed his colleagues saying that along with the letter Ofgem also had to send claimants a t-shirt bearing the message "keep calm and hide the evidence".
Asked to explain that, he says it was meant as a humorous and sarcastic response because he viewed the counter fraud team's proposed approach to claimants as inappropriate.
Instead, he wanted a more subtle approach to be taken when contacting scheme claimants who were due to be inspected because sending out letters addressed from the counter-fraud team could spook some claimants or offer a tip-off to those who may be gaming the scheme.
In October 2014 DETI's Stuart Wightman - who had oversight for the RHI scheme in Northern Ireland - wrote to Ofgem to say he was "wrongly under the impression that" about one in 10 boiler installations were being inspected.
He said he'd heard "anecdotal evidence of gaming of the system" and he wanted to "ensure that appropriate controls are in place to circumvent this".
The number of installations being inspected was much smaller - it was between 1% and 2% of installations.
Image source, Getty ImagesRicardo-AEA - the audit subcontractor - told Ofgem in its report about the Northern Ireland audits it had carried out that the number was "very small and it's difficult to comment" on whether the finding were representative with the scheme as a whole.
Mr John says he's not aware of whether that was shared with DETI and in retrospect there's no reason why it wasn't done.
In November 2013, subcontractors Ricardo-AEA reported to Ofgem on an audit of a Great Britain RHI scheme installation in Hertfordshire.
This site was running multiple boilers heating a single space, there were external heat losses and the operator's records showed a higher heat output than stated on the boiler nameplate.
Ricardo said that was an example of a scheme participant reading the guidance documentation and "identifying loopholes" - the system was specifically designed to maximise the benefits from the scheme.
Elsewhere, auditors identified poultry sheds as being prone to multiple-boilers installations.
Image source, Getty ImagesMr Aiken asks why that kind of material would not have been passed on to DETI and to the Whitehall department responsible for the GB RHI scheme.
"I don't know, I've not seen this document before," says Mr John, explaining that it was before his time in the job at Ofgem.
Dame Una O'Brien interjects that the Ricardo-AEA document "is almost a word-for-word description of what materialised in Northern Ireland - it's even got photographs of a building with the doors and windows open".
Image source, RHI InquiryAsked if DETI ever received Ofgem's 2013 fraud prevention strategy for the RHI scheme, Mr John says he's not aware if it was or not.
In fact, DETI didn't receive the strategy until 2015 when it appeared in an annex to another document.
And the witness concedes that he can't see any reason why DETI didn't get it long before then.
Image source, RHI InquiryInquiry panellist Dr Keith MacLean says that Ofgem doesn't seem to have been monitoring whether its list of fraud mitigation measures for the RHI scheme were actually working.
"If you're not monitoring that how on earth can that be a fraud prevention measure?" he asks.
"We're seeing all the words here but there doesn't seem to be any follow-up... to see if your mitigation is working."
Ofgem's fraud prevention strategy listed the tiering of subsidies on offer through the RHI scheme as a way that the wasteful use of heat by claimants was being prevented.
Tiering, as we mentioned earlier, works by reducing the subsidy on offer once a claimant has used a certain amount of heat, therefore of preventing them from overusing their heating system to collect more cash.
Image source, PABut, of course, there was no tiering in the Northern Ireland RHI scheme.
Mr John is asked if Ofgem managers ever caught on to the fact that a mechanism they believed was making it impossible for claimants to game the scheme didn't actually exist.
"Yes, that appears to be the case," he says.
Ofgem used subcontractors to carry out site audits on RHI scheme boiler installations in Northern Ireland
Sir Patrick wants to know whether those auditors were supplied with the fraud prevention and risk register documents but Mr John says he doesn't know what information was shared with them, telling the inquiry that would've been dealt with by someone at a lower level than him.
The inquiry chair is concerned that if the fraud prevention strategy was shared with the subcontractors it means they were being given information that did not bear any relation to the Northern Ireland scheme's regulations.
On the other hand, he says, if the documentation was not supplied, he queries if that means it was up to the subcontractor to work out for themselves if there was a problem when they saw a multiple-boiler installation.
"If that's the case it lays an enormous risk on the basis of the discretion of subcontractors," he says.
A mitigation measure that was in place to deal with circumstances in which claimants installed multiple boilers in order to maximise the amount of money they could claim through the RHI scheme "dropped off" Ofgem's risk register for the initiative, says Mr Aiken.
So-called gaming of the scheme was one of the major issues the led to the catastrophic overspend of a projected hundreds of millions of pounds.
Some claimants installed several small boilers to meet their heating requirement rather than a single larger unit in order to obtain a higher subsidy that was on offer for smaller installations.
Mr John says he's not aware of any communication with DETI to say the change had happened.
Inquiry chair Sir Patrick Coghlin says that whoever made the change to the risk register "removed what on the face of it was a perfectly effective way of dealing with multiple boilers and put in one that wasn't".
"No doubt we'll come across that genius at some stage," he adds.
Image source, RHI InquirySuitably refreshed, the inquiry panel, the legal teams and Mr John are all back in the Senate chamber for the afternoon session.
Inquiry barrister Mr Aiken (above) outlines the three broad areas he wants to cover with Mr John. They are:
Sir Patrick calls time on the day's opening session, which turned into a bit of a grind in its latter part.
We'll be back at 14:00 when Mr Aiken will be delving deeper into Ofgem's role in the RHI scheme - join us then.
Questions continue on the point of whether or not the issue of cost controls - specifically degression - was mentioned in the meetings between DETI and Ofgem in 2014 and Mr John continues to insist it was.
He's asked by the inquiry panellist Dame Una O'Brien if he raised it personally at the meetings.
Image source, RHI InquiryHis memory is that there was a "general discussion", adding: "I can't remember if I personally raised it but I can recollect it being discussed."
Dame Una presses a little harder: "So, is it likely you would've raised it or do you think it was someone else?"
"I can't recollect," replies the witness.
Mr John was part of an Ofgem delegation that met DETI officials in Belfast in April and October 2014.
He claims they discussed cost controls for the RHI scheme, specifically degression, at both of the meetings but Mr Aiken tells him that the DETI staff have a completely different recollection of the October meeting.
Image source, Getty ImagesA detailed DETI minute of the April meeting makes no mention of any discussion of cost controls or any reference to degression.
And an email sent by Mr John to colleagues after the meeting lists numerous subjects that were discussed, but again there's no reference to cost controls.
Image source, RHI InquiryAsked if he informed that Ofgem's governing board that it was continuing to administer the RHI scheme even though the financial approval for it had elapsed, Mr John says he can't remember.
Inquiry panellist Dr Keith MacLean suggests that the concerns about the scheme should've been "escalated pretty quickly", given that the budget both for admin costs and for paying claimants - which was done through Ofgem - had suddenly become uncertain.
"I'm surprised that there's a fairly substantial risk that's developing here that affects the payments for all of the accredited parties and future obligations but you're not sure if that was even... escalated it further within the organisation," he adds.
In light of the legal advice, it was decided by DETI that it would be "continuation of business as usual" for the RHI scheme, as one Ofgem official noted in an email from May 2015.
But there was a proposal for cost controls to be fasttracked and to come into effect in October that year.
It envisaged a tiered tariff for all biomass boilers up to 200kW and sequenced reductions in the tariffs were also proposed for October, April 2016 and April 2017, with DETI intending to put the proposals to public consultation over the summer of 2015.
Image source, Getty ImagesThere was a belief within DETI that the necessary funding for the scheme would be provided but now there was another problem to add to the mix - it was discovered that the scheme's approval by Stormont's finance department had elapsed.
Mr John says it was relayed to him that sign-off for the funding for DETI was a "formality" and it would "arrive in three to four week", adding: "I had no reason to doubt that at the time."
Image source, RHI InquiryMr John asked Ofgem's lawyers to consider whether it had an obligation to stop accrediting RHI scheme applicants after an instruction from DETI.
He was told there was nothing in the administrative agreement with DETI requiring Ofgem to comply with such a request.
Legal advisor Catherine Scott said that on examination of the scheme's regulations she "can't see anything that allows DETI to suspend operations with no notice".
Image source, Getty ImagesEmails show that Mr John had concerns that Ofgem wouldn't be paid for its work on the RHI scheme as a result of DETI's budget problems.
"The biggest wider implication," he wrote, "is who is going to pay for the £55k for the first quarter. Are they saying this is unfunded? We can't just down tools."
He tells the inquiry that he needed "certainty" because Ofgem had incurred costs it was a "new experience for me in terms of trying to understand the impact of what DETI were saying".
So what was Mr John's reaction when he heard of the concerns over DETI's budget for RHI?
He says he had three concerns. They were:
Image source, RHI InquiryWhen Ofgem's head of operations Teri Clifton (above) forwarded Mr Wightman's email to Mr John she described it as "interesting and unprecedented for us".
Mr Aiken suggests that may have been "a bit of an understatement".
In May 2015, the penny dropped with the DETI team running the RHI scheme that it was running over its budget and Stormont finance officials ordered it to "please stop entering into commitments immediately" in order to stop the spend from increasing even more.
But it wasn't possible to halt the scheme there and then, so DETI official Stuart Wightman asked Ofgem if it could "queue applications for a few weeks" until he had "clarity" over the available budget.
He said that due to the increase in applications its monthly RHI scheme payments had gone from £264,000 in March 2014 to £1.5m in June 2015.
He also said that DETI may need to add a cost control mechanism - tiering - to the scheme sooner than planned.
Tiering is an important way of controlling the cost of the scheme and works by dropping the tariff on offer once a certain limit of usage of a claimant's heating system has been reached, with the intention of preventing them from overusing it to collect more cash.