Renewable Heat Incentive Inquiry examining botched energy scheme
Emer Morelli of Department of Finance faces inquiry questions
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 hearings in critical phase with high-profile witnesses giving evidence
That was a somewhat dry day at the RHI Inquiry in comparison to what's gone on in the Senate chamber in recent weeks, with some gripping evidence from the political players in the story.
Tomorrow should be a bit juicier - Dr Andrew McCormick, a senior DETI civil servant who had a front row seat as the RHI scheme crashed and burned in 2015 and 2016, will give his view to the inquiry.
Join us from 09:45 tomorrow...
Jayne McCormack
BBC News NI politics reporter
Stormont's finance department was effectively "backed into a corner" to approve more funding for the RHI scheme when its budget had spiralled out of control, the inquiry heard.
Officials who were working on the scheme had drawn up a proposal to add cost controls to it in autumn 2015 and publicly announced their intention before the finance department was given sight of the plan.
Image source, PacemakerInquiry counsel Joseph Aiken suggested that things had been done the "wrong way round".
Emer Morelli, a senior finance official, said the ship had "very firmly sailed" by the time the plans were put to her department.
Inquiry panellist Dame Una O'Brien questions whether Stormont's Department of Finance has the "necessary authority" to make sure that other departments adhere to its instructions and rules on spending public money.
She points to occasions during the running of the the RHI scheme when DETI didn't follow through on carrying out reviews of the initiative, for example, that were required of it.
Image source, RHI InquiryEmer Morelli says that before the inquiry process she "would've had no hesitation in saying yes".
But having looked at the evidence that's been uncovered it "need to be absolutely refreshed".
In January 2017, a month after the RHI fiasco publicly erupted, there was a scramble on at Stormont's economy and finance departments to draw up a plan to cut back on the vast overspend of public money.
The plan was to retrospectively cut the subsidies that scheme claimants would receive - it was highly controversial among owners of biomass boilers on the initiative.
The granting of approvals for such plans is for the head of supply in the finance department - that was Emer Morelli.
Image source, PacemakerBut she tells the inquiry that the then finance minister - Sinn Féin's Máirtín Ó Muilleoir (above) - revoked her authority to do that, taking the decision out of her hands.
Ms Morelli says he did that because by then it was a "significant issue" and he was "totally entitled" to make sure that he was content with the plan that was being worked up.
She says she's never been aware of a minister taking such action before but "we were in such unique times".
"I think he made an announcement to the press that he personally would be dealing with this case."
DETI had been spending money on the RHI scheme without authorisation from Stormont's finance department between the start of April 2015 and the end of October that year.
The initial approval for the scheme had been given from the opening date in November 2012 until the end of March 2015.
The department applied for retrospective approval of that unauthorised spending but Emer Morelli at the Department of Finance refused to give it.
Image source, Getty ImagesIn her letter outlining her decision, she said the DETI should've approached her department long before the March 2015 and there "would've been an opportunity for open dialogue" about how the scheme was being run.
But because that didn't happen, finance officials were "not afforded the opportunity to review or influence the policy decisions being taken" about the scheme.
The total unapproved expenditure over the 20-year lifetime of the scheme amounted to about £370m.
Ms Morelli says that irregular spending over the course of 20 years was "unheard of - it's highly unusual" and that to have done anything else but reject the spending "wouldn't have been right".
In December 2015, Emer Morelli received a letter from a senior DETI official informing her of the spike in applications to the RHI scheme prior to the cuts in the subsidies.
That indicated to her that "the actual response far exceeded expectation".
Image source, RHI InquiryThe finance department had approved the business case based on an estimate of £30m a year - Ms Morelli was being told the latest estimate was for £44.2m.
She says her reaction was one of disbelief: "This was now red-button panic time."
The man managing the RHI scheme - DETI's Stuart Wightman (below) - told a senior manager in his department in November 2015 that there was an "unprecedented" surge in applications the previous month.
The original expectation had been that 100 would be received but the actually number turned out that more than 800.
Image source, RHI InquiryHe noted that it could end up the expenditure on the scheme could top £40m a year even if both scheme were shut down from April 2016 and said there was "no choice now but to move to close" the initiative.
Asked by Joseph Aiken if anyone at DETI consulted the finance department to say "all bets are off here - this is even worse that we'd thought", Emer Morelli says it didn't as far as she's aware.
In her letter granting approval from Stormont's finance department for the RHI scheme changes, Emer Morelli stated that her officials had a "limited window" to review the proposal.
Image source, Getty ImagesIt had been "difficult" to conclude that the changes "will deliver the optimal outcome" but she accepted that further delay could result in more people signing up to get the scheme's most lucrative subsidies.
The approval was granted until the end of March 2016 and Ms Morelli said that the Department of Finance would be closely scrutinising DETI's operation of the scheme.
Inquiry counsel Joseph Aiken asks the witness why the Department of Finance didn't just refuse to grant approval to DETI for the business case for the RHI scheme changes and cause it to stop.
Emer Morelli says a refusal wouldn't have stopped DETI, claiming that her department was left with no choice but to give its approval because DETI had already embarked on a course towards subsidy changes.
Image source, RHI InquiryAs Mr Aiken puts it: "Even if it wasn't going to be the right solution it was still a corrective step that was worth taking than no step being taken."
Ms Morelli says that in October 2015 she thought "the corrective step was the right step".
Officials at the finance department generally have three weeks to assess "routine" business cases, says Emer Morelli - they had just two days to work with what they were given on the RHI scheme changes.
One civil servant who had what she described as a "really quick look" at it noted that it was "notoriously hard" to predict the level of uptake on the scheme.
Image source, Getty ImagesShe said that the employment benefits that had been claimed in the business case had never been taken into account before and "significantly changes" how the scheme could be viewed.
Inquiry barrister Joseph Aiken notes that the official "wasn't really giving [the business case] a ringing endorsement" and she effectively said she didn't have time to properly assess it.
A finance department economist said that she "would not be comfortable" if what was being proposed by DETI "was a long-term proposal" but "on balance... this is a reasonable approach as an interim measure".
Some of the figures outlined in the business case for the RHI scheme changes in autumn 2015 didn't stack up.
Inquiry panellist Dr Keith MacLean says it tells a "remarkable story" that DETI claimed it would spend £74m in subsidies and Northern Ireland would subsequently benefit to the tune of about £100m as a result of jobs created.
Image source, Getty Images"It sounds like a rather magic machine that you'd want more of," he says, questioning whether DETI was being "challenged sufficiently" by finance department officials about the numbers it was putting forward.
Emer Morelli says she was relying on DETI to provide a "robust business case that stacked up".
The business case that DETI's energy team had drawn up for the changes to the RHI scheme in the autumn of 2015 contained some statements that were factually untrue.
Image source, Getty ImagesIt stated that a review of the scheme to "improve [its] performance" had happened in October 2013 - that, as the inquiry heard this morning, didn't happen.
It also stated that approval under EU state aid rules had been secured - it had not.
Image source, RHI InquiryIt appears the inquiry panel has been feeling the heat - literally - in the Senate chamber.
Inquiry barrister Joseph Aiken says it had been suggested that the warmth "might put the panel to sleep" so he asked for the room to be "cooled right down so that only what I had to say was doing that".
On with the day's second session...
Jayne McCormack
BBC News NI politics reporter
Stormont's finance department was effectively "backed into a corner" to approve more funding for the RHI scheme when its budget had spiralled out of control, the inquiry heard.
Officials who were working on the scheme had drawn up a proposal to add cost controls to it in autumn 2015 and publicly announced their intention before the finance department was given sight of the plan.
Image source, RHI InquiryInquiry counsel Joseph Aiken suggested that things had been done the "wrong way round".
Emer Morelli, a senior finance official, said the ship had "very firmly sailed" by the time the plans were put to her department.
Everyone's off for a bite to eat. Join us again at 14:00 for the afternoon session.
Emer Morelli went into the internal scrutiny panel's October 2015 meeting about the changes to the RHI scheme and she had a list of questions for the DETI officials.
Image source, Getty ImagesShe tells the inquiry she was thinking: "What are we actually here for, for a start, and... what are we being asked to approve and how did you arrive at it?"
She says the finance department were told by DETI that the cuts to the subsidies on offer through the scheme were going ahead in November that year and that those changes would help to control it.
It took six months for the minutes from a key DETI scrutiny stage of the changes to the RHI scheme to be signed off.
A internal panel known as a casework committee had to assess the business case for the changes before they got the go-ahead - its meeting took place on 21 October 2015.
Image source, Getty ImagesThe casework committee stage is essentially a peer review with a challenge role - the team behind the policy has to justify their approach to the project to bosses at their department.
The minutes were finally approved in March the following year.
Barrister Joseph Aiken suggests with a smile that one recommendation the inquiry panel could make is that there should be time limit for minutes to be completed.
In early September 2015, DETI made an announcement to the public about its planned changes to the RHI scheme and engaged with the Northern Ireland Assembly's Enterprise Committee on its proposals on subsidy changes.
In her written statement, Ms Morelli says: "DETI did not follow appropriate processes, nor did it adequately inform [the finance department] throughout this process."
Image source, RHI InquiryShe confirms that the first she time she learned that the measures she was being asked to approve had already been announced was at the meeting at the end of that month.
"It was quite a robust meeting," says the witness.
Inquiry panellist Dame Una O'Brien, with her experience at the top level in the Whitehall civil service, asks whether that prompted a "firm letter" to be sent to DETI - Ms Morelli says that didn't happen.
Emer Morelli came away from her meeting with DETI at the end of September 2015 feeling "unsettled" after officials made a series of "assertions" about the RHI scheme.
She tells the inquiry that she was told it had delivered value for money and that it needed to continue in order to keep jobs in Northern Ireland.
Image source, RHI InquiryAnd officials even claimed that the Stormont executive would cover any overspend and financial penalties associated with that "because the scheme was so good for Northern Ireland".
The scheme had been a success in one sense - it had helped Northern Ireland to achieve a key target for increasing heat production from renewable fuel sources - but that had, of course, come at a big cost to the public finances.
Ms Morelli says she "couldn't make sense" of what the officials said because it was "surprise after surprise".
At the end of September 2015, Emer Morelli, as a senior official in the finance department, called a meeting with DETI officials who were running the RHI scheme to find out why the business case for the changes to it had yet to be submitted.
The changes - including the addition of crucial cost controls - were due to come into effect within a few weeks.
Image source, RHI InquiryMs Morelli says it would've "very rarely" had a meeting with policy officials in another department and her need to call it "mirrored my own frustration with the delay" in receiving what she needed from DETI.
"This was an urgent case - where was it?"