Northern Ireland

RHI Scheme: Westminster intervention required to alter green energy tariffs – civil servant

The RHI scheme was set up in 2012 to encourage businesses and other non-domestic users to switch to environmentally friendly wood pellet burning systems (Liam McBurney/PA)
The RHI scheme was set up in 2012 to encourage businesses and other non-domestic users to switch to environmentally friendly wood pellet burning systems (Liam McBurney/PA) The RHI scheme was set up in 2012 to encourage businesses and other non-domestic users to switch to environmentally friendly wood pellet burning systems (Liam McBurney/PA)

Westminster intervention will be required to change the tariff rates for participants in the RHI scheme, a senior civil servant has said.

Mike Brennan, permanent secretary at the Department for the Economy told MPs on the Northern Ireland Affairs Committee that there was “no easy way forward” to make adjustments to payments in the green energy scheme in the absence of a functioning Stormont Assembly.

Set up in 2012 to encourage businesses and other non-domestic users to switch to environmentally friendly wood pellet burning systems, the RHI (Renewable Heat Incentive) scheme was plunged into controversy when the potential cost to taxpayers emerged.

It became known as the “cash for ash” scandal because subsidies were higher than fuel costs and led to the collapse of Stormont’s power-sharing executive in January 2017.

Stormont
Stormont The Stormont Assembly is currently not operating (Liam McBurney/PA)

Under revised tariff rates introduced in 2019, payments made to scheme members were substantially reduced.

The Stormont Assembly was restored in 2020 but collapsed again last year as part of the DUP protest against post-Brexit trading arrangements.

The Westminster committee is investigating the implications of a Court of Appeal ruling earlier this year that the decision to reduce tariffs was lawful.

Mr Brennan told MPs that officials in his department had been working on a way forward to adjust the reduced RHI tariffs.

He said: “The complication is we don’t have ministers and we don’t have an executive to air solutions with.”

“We fully recognise that there does need to be tariff adjustments. We unfortunately do not have an easy way forward to make those tariff adjustments.

“If the department wants to make tariff adjustments it needs to lay them in the Assembly, so in the absence of an Assembly that is not a straightforward process.

“We are working with colleagues in the Northern Ireland Office and discussing how best to move that forward.

“In the absence of an endorsed Executive way forward the only option left to us is with the NIO to progress something through Westminster.”

Mr Brennan said they wanted to give participants in the scheme a 12% rate of return.

He said: “Tariffs were always going to need to be adjusted over the 20-year period because there would be fluctuations in prices of comparator fuels, inflation would change.

“We are now looking to construct a tariff that gets participants back on track to achieve the 12% rate of return they were expecting.”

The department’s head of energy policy Richard Rodgers added: “We are at the business case stage now where effectively we are seeking approval from the Department of Finance for the solution we propose.

“At that point we will need legislation to enable that change.

“We are very much focused on trying to deliver this for April 1 2024 to bring people back on track for the target rate of return of 12%.”