Government proposals to compensate boiler owners over RHI losses unlikely to ever happen, court told

Government proposals for compensating boiler owners in Northern Ireland whose rights were “obliterated” by massive cuts to Renewable Heat Incentive (RHI) payments are unlikely to ever happen, the Court of Appeal heard on Wednesday.

Judges were told two options have been explored: closing the flawed scheme and buying out participants; or potentially revising tariff rates.

But counsel for operators challenging the reductions in their subsidies insisted the public consultation announced last year by the Stormont Executive has come to nothing.

Gerald Simpson QC said: “We don’t even have a functioning government at the moment.

“There is nothing there, there is unlikely to be anything in the near future and when it comes to the fair balance the court should take the view there is not likely to be an amelioration scheme.”

Judgment was reserved following three days of legal arguments.

Members of the Renewable Heat Association NI Ltd and poultry farmer Thomas Forgrave are taking separate cases against the Department for the Economy over legislative changes introduced in 2017 and 2019.

The revised RHI regulations saw average annual payments to non-domestic operators cut from £13,000 to £2,000.

Boiler owners claim it was an unlawful step taken against operators given a 20-year guaranteed rate of return when they invested in the green energy initiative back in 2012.

Set up to encourage businesses and other non-domestic users to switch to environmentally friendly wood pellet burning systems, the RHI scheme was plunged into controversy after the potential cost to taxpayers emerged.

Because subsidies were higher than fuel costs it became known as "cash for ash", closed to new entrants in 2016 and eventually led to the collapse of the Stormont's power-sharing administration a year later.

A public inquiry chaired by Sir Patrick Coghlin identified a series of failings but found no evidence of illegal activity.

Two judicial review judges have already held that the tariff cuts were lawful.

Appealing those rulings, lawyers for the “2012 cohort” of boiler owners claim insufficient weight was given to the potentially catastrophic impact on their businesses.

The court also heard that despite lurid headlines at one stage about the scheme potentially costing up to £700m, a £390m underspend is now estimated.

Tony McGleenan QC, for the Department, set out how the Executive has considered shutting down the scheme and buying out participants.

“There is potentially scope for revision of the tariffs upwards again, and there’s scope for potentially backdating tariffs,” he added.

“Those are the options - closure with compensation or the revision of the tariffs.”

It was acknowledged, however, that the proposals were examined by the previous Stormont Executive.

“There wasn’t a final political agreement on which of those two approaches would be adopted,” Mr McGleenan said.

But Mr Simpson urged the three appeal judges to ignore the lapsed consultation process.

“All the promises, all the suggestions about what might happen have failed to materialise,” he said. “Why would any court believe that something might be done when nothing has been done?”

Counsel argued that a potential upward revision in tariff rates showed that the cuts made in 2019 were not the least intrusive method of dealing with problems in the scheme.

He added: “Departmental officials thought it was going to be paid for by London.

“It was only when they realised that wasn’t right, that they did anything and then resorted to panic and unnecessary measures.”

Reiterating that no official has ever faced sanctions, Mr Simpson went on: “The only people to suffer and who continue to suffer financial and personal damage are the people whose only mistake was to believe government promises.

“They have used the scheme in the way it was designed and promoted.

“How could anyone consider these rights to be practical and effective if they were subject to change, the way they were changed in 2017 and then virtually obliterated in 2019 to the extent it will result in a £390m underspend?”

Following closing submissions Lady Chief Justice Dame Siobhan Keegan told the parties: “There’s obviously quite a lot for us to consider. We will reserve our judgment in this case and provide it as soon as we can.” 

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