Ten RHI boilers were running for almost all of the year except for the time required to service them, with the owners receiving huge taxpayer-funded payments, auditors have found.
The boilers were being used for 90% or more of the 8,760 hours in a year and in each case taking in a subsidy of at least £50,000 per boiler.
For comparison, if a boiler ran for every minute of the year – with no maintenance or cleaning – it would have made a notional £56,371 in subsidy.
Although the 10 cases are particularly extreme, almost 40% of the boilers installed before cost controls were introduced in November 2015 have been running for more than half of the hours in a year – more than 12 hours a day, seven days a week for the entire year, receiving a subsidy of at least £28,000.
So far, just two claimants have had their claims revoked and the department “is currently seeking recovery of all grants paid” to those individuals.
The revelations come in a new report by the Northern Ireland Audit Office which confirms that for a second year it had qualified the accounts of Stormont’s Department for the Economy due to “ongoing weaknesses in controls in the non-domestic RHI scheme” and a series of other departmental failures.
The report shows radical behavioural changes from the point at which cost controls were introduced in November 2015.
From boilers accredited after that point, the lack of the perverse ‘burn to earn’ incentive “appears to have had a significant impact on the amount of use of these boilers, with the majority using the boilers for less than 20% of the hours in the year and only one user above 50%”.
Despite acknowledging some progress by the department in addressing past concerns, Comptroller and Auditor General Kieran Donnelly said: “I continue to have significant concerns about the operation of this scheme and the serious systemic weaknesses in controls that have facilitated the possibility of funding that is at best not in line with the spirit of the scheme and at worst is fraudulent.”
Mr Donnelly also said that he had received a number of concerns from members of the public who had contacted him under whistle-blowing provisions and that he had passed those issues to the department.
The report reveals that less than half (47%) of 295 boilers inspected last year were found to be operating in a way where heat was being generated for an eligible purpose within the intentions of the scheme.
A further 37% of the boilers were generating heat for an eligible purpose but which does not meet the intentions of the scheme, 10% were generating heat for an eligible purpose but using it in a way that is not energy efficient and 6% were generating heat which “may be for an ineligible purpose and therefore may be in breach of the scheme”.
The Audit Office also confirms that even if the retrospective cost controls – rushed in six months after the scandal had led to a public outcry – currently being challenged in the High Court survive that challenge there will still be a £2 million annual overspend on the scheme.
However, the RHI overspend last year was less than the Audit Office had forecast. It had expected the overspend to have been more than £32 million; in fact it was £27 million (on top of the £18 million which came direct from the Treasury).
Mr Donnelly said that he was also concerned at “the extent of the use of multiple boilers which allowed applicants to claim a considerably higher level of subsidy payments than would have been payable for installations with a single boiler of a more appropriate size”.
Wood dried, then fed straight back into boiler
In August and September last year, the department asked consultants PriceWaterhouseCoopers (PwC) to examine a sample of RHI claimants.
The Audit Office said that “generally” PwC had found that poultry, farm and general commercial sectors were generating heat for an eligible purpose and within the intention of the scheme.
However, the report said that the department had told auditors that “that its calculations clearly show that users [in that category] may still have been generating excessive profits from the scheme because of high levels of use and the lack of tiering of tariff rates or a cap on usage”.
The report also sets out in detail how sites where “process drying and the drying of wood chip” were involved were categorised by inspectors in more problematic categories.
“They found a significant number of drying operations that were considered to be wasteful and inefficient, which included some that would not have been economically viable in the absence of support payments from the scheme.
“They also found a number of boilers, all of which were included in Category 4 [which may be in outright breach of the rules], for which the majority or all of the heat output had the potential to be serving a domestic dwelling. This is significant because the RHI scheme for domestic customers was considerably less generous than that for non-domestic customers.”
And it set out so-called “parasitic wood chip drying” whereby wood chip was dried purely to be fed back into the boilers used to dry the wood or for other boilers such as those supplying a domestic house.
The report said: “In these cases, subsidy payments may have been received for the heat used to dry the fuel which would then be used to dry more fuel for which further support payments would be received.”