RHI scheme projected overspend 'flawed', court told

Tariffs for the scheme were set by the Department for the Environment

A government calculation of the projected Renewable Heat Incentive (RHI) scheme overspend was "flawed", it has been claimed.

The real figure could be several hundred million pounds less than stated, a court was told.

Officials in the Department for the Economy estimated that it could cost NI taxpayers £500m over 20 years.

But an economic appraisal for boiler owners suggested it could be £161m over the period.

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A legal challenge has been taken by boiler owners against a decision by Stormont's Department for the Economy to reduce the scheme's tariff payments.

A hearing on Thursday was told that if two biomass heat and power plants, which were factored into the departmental calculation, are not built the cost would reduce further to £60m.

The plants are not covered by EU state aid approval, making it unlikely they would be developed, the court was told.

'Flawed assumption'

Consultants arrived at the £161m figure by stripping out the effect of inflation, which was described as a "variable cost".

A reduction was also made for boilers which would fail to be accredited to the scheme; for those that broke down irreparably and could not reapply to the now closed scheme; and for boiler operators thrown out of RHI for fraud.

The court was told that if the figure were to be £161m that was the equivalent of 0.07% of the Northern Ireland annual block grant.

A barrister for the Renewable Heat Association, which is taking the case, said the £500m overspend was based on a "flawed assumption".

He said calculations by departmental officials to work out an acceptable rate of return for scheme participants were poorly done, and that mistake was now being visited on those who had adopted RHI.

"Because the department got it wrong all the way down the line you, the people who made the investments, are the ones who have to suffer, " he said.

'Binding obligation'

Later, the court was told that there was nothing in the legislation which gave the department the power to make the changes to the tariff rate.

The boiler owners' barrister said a precedent had been set in a similar case before the English courts in 2012.

At that time, government proposals to cut solar tariffs for small scale generators was deemed unlawful.

The barrister said RHI participants had an expectation they would receive a fixed tariff.

"They has a legal entitlement to it and there was an equally binding obligation on the department to pay it", he said.