Belfast court rules reducing heat scheme payments was lawful

Cutting payments under the controversial Renewable Heat Incentive scheme in the North was a lawful step to prevent potential overspend of close to £700 million (€787m), a Belfast High Court judge has ruled.

Mr Justice Adrian Colton held that Stormont’s introduction of reduced tariffs in the botched green energy initiative did not represent an abuse of power.

A political row over the scheme lay behind the resignation of the late former deputy first minister Martin McGuinness, and Sinn Féin's withdrawal from the Northern Ireland Executive, which collapsed as a result.

Dismissing a legal challenge by a group of boiler owners, Mr Justice Colton found that continuing with the original rates brought in five years ago would have had "severe consequences" for the Northern Ireland budget.

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“I have come to the conclusion that there is a compelling public interest justifying the interference with the rights of the affected persons under the 2012 regulations.

“I consider that the 2017 regulations strike the requisite fair balance between the public interest and the individual rights of the affected persons.”

More than 500 members of the Renewable Heat Association NI Ltd were seeking to judicially review the Department of the Economy for cutting their payments. They claimed it was an unlawful step taken against operators with a cast-iron 20-year guaranteed rate of return on their investments.

Set up to encourage businesses and other non-domestic users to move to renewable heating systems, the scheme was plunged into controversy after the potential cost to taxpayers emerged. With operators legitimately able to earn more cash the more fuel they burned, the bill has been projected at up to £490m (€551m) – a figure disputed by the association. According to its lawyers, the overspend could end up being as low as £60 million (€67m).

Cost controls

However, the department responded by claiming the figure could actually have reached £700 million without the new cost controls.

The debacle surrounding the initiative led to the establishment of an ongoing public inquiry chaired by retired judge Sir Patrick Coghlin.

Earlier this year former economy minister Simon Hamilton set out revised 2017 RHI regulations at the centre of the legal challenge. Counsel for the association claimed the reduced rates "flew in the face of" all Stormont assurances, and accused officials who ran the initiative of incompetence, hopeless oversight and a catalogue of errors.

However, the department’s barrister countered that the revised tariffs were essential to stop public money “haemorrhaging” for at least a decade. He insisted primary legislation provided legal authority for the move.

Delivering judgment, Mr Justice Colton identified a clash between the private interests of the boiler owners and the public interest asserted by the department as being at the heart of the case.

Investment

He pointed out that the tariff changes were being introduced at a time when, on average, participants in the scheme have already received support payments in excess of their original capital investment.

One operator, referred to as DA, has already received £226,589 against capital costs of £111,000 – a 204 per cent return on his spend, the judge noted.

If he continues to receive payments on the original basis he is estimated to receive a total in excess of £2.5 million (€2.8m).

Mr Justice Colton said: “I am also satisfied that the continuation of the 2012 Scheme, absent the 2017 regulations, will have severe consequences for the Northern Ireland budget which I have found to be close to the anticipated £0.7 billion put forward by the respondent, albeit with some caveats and adjustments.”