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CHAPTER 7

WHISTLING IN THE WIND

It was a Monday morning and Janette O’Hagan was in the office of Okotech, her small technology company, in Antrim. The business had been set up the previous year and was centred around the development of energy - efficient heating controls called heatboss. The product enabled heating to be wirelessly controlled, switching the heat on and off in individual rooms remotely, rather than heating an entire property when much of it may be empty. Her pitch to businesses was simple: buy my product and expect to pay 30% less for heat. But on the morning of 26 August 2013, O’Hagan was not marketing her fledgling company’s product to potential customers. She had stumbled across something hard to believe, but because it was impacting her business she quickly came to see that it was true.

While most businesses were interested in discovering how they could save money on their heating bill, companies with biomass boilers seemed to have no interest. Baffled, O’Hagan dug into the issue. She had picked up in conversations at industry events that these businesses were receiving the RHI subsidy. She recalled:

The more I was hearing, the more I was getting more convinced, so I looked online, and I went onto the DETI website and looked at the tariffs that were set, and immediately I thought — and I mean immediately — thought that, ‘That can’t be right. You know, that can’t be right. Where is the limit? How do you ensure people are being efficient there?’

And then, whenever I compared it to the GB tariffs and their tiers, and they just seemed to have got it. They got it that, ‘Yes, we have to incentivise people to take up this technology’ … but they knew that there had to be a limit, you know: ‘We have to not incentivise waste’.

This epiphany immediately explained why when she contacted businesses with RHI boilers they were not interested in being efficient because the more that they burned, the more they earned. With scant knowledge of politics, she was unsure what to do. But she was clear that she had to try to alert the authorities to what was happening. Not only was her business suffering as a result of the RHI but she was angry at the thought of such waste being incentivised by government. That Monday morning she decided to go right to the top – to Arlene Foster. O’Hagan sent an email to DETI’s generic email address, marking it for the attention of Arlene Foster. It was a general email setting out her company’s attempts to facilitate energy efficiency and asked for a meeting with Foster to discuss the issue. Moments after hitting ‘send’, she had second thoughts. Would an email to a generic email inbox get picked up? And, if it did, would it ever make its way to the minister?

O’Hagan decided to try another route. Searching the DUP website, she found an email address where Foster could be emailed about constituency issues. Five minutes after sending the initial email, she sent a second to Foster but added the line: ‘Given the benefits of RHI, we find that many of our potential customers are no longer worried about becoming more efficient, because they are now more sustainable.’ It was a cryptic reference to the problem, but her intention was to secure a meeting at which she could explain RHI’s central flaw. Eight days later, there had been no response to either email.

Undeterred, O’Hagan sat down again and emailed arlene@arlenefoster.org.uk. This time she was more direct, telling the minister: ‘Given the benefits of RHI, we find that many of our potential customers are no longer worried about becoming more efficient, in fact it pays them to use as much as they can – in fact the incentive to use more is leading to misuse in some cases.’ Now, just ten months after the launch of RHI, Foster had been warned explicitly that it was in itself a perverse incentive to waste heat and was being actively abused. O’Hagan never received a reply to that email and there is no electronic record of it ever having been passed on to DETI – unlike the initial email, which Foster had forwarded to her private office. However, two days later O’Hagan was contacted by a DETI official who said that Foster could not meet her but a meeting would be arranged with officials. The businesswoman was in no doubt that it was her second and more direct email to Foster that led to the response.

O’Hagan had not known what to expect and was pleasantly surprised to be told that she was being offered a meeting. A month later, she was sitting around a table in DETI’s Netherleigh House headquarters with the triumvirate of civil servants who knew more about RHI than anyone else – Fiona Hepper, Joanne McCutcheon and Peter Hutchinson. The fact that all three met her for an hour at a time when the civil servants say they were overworked suggests that this was thought to be more important than simply a businesswoman with a commercial complaint.

But their disposition in the meeting left O’Hagan despondent. On leaving the rambling DETI headquarters, she felt that she had wasted her time. As in her email to Foster, O’Hagan had warned them of the perverse incentive to run boilers around the clock with windows open. With lurid language, she told the civil servants that she was surprised people weren’t mounting radiators on the outside walls of buildings, such was the financial incentive to waste heat. The response – she thinks it was from McCutcheon, but certainly from one of the three – never left her: ‘We don’t think people will do that.’ O’Hagan shot back: ‘Well, they can, and they will, and I’m surprised they’re not mounting them on the outside.’ She was certain of her facts because she had compared Stormont’s scheme to the one in GB and she also had first-hand experience of how those with biomass boilers reacted to the offer of cutting their fuel bill, as well as what others in the energy industry were saying. But she also had something else.

Just two months earlier, O’Hagan had approached BS Holdings, the biomass installer which had within weeks worked out that the scheme was a money-maker, with a proposal to work together – the heatboss system would be installed along with the biomass boiler, thus saving money on two fronts. But ahead of the meeting, the boiler installer sent her an email to caution that for its RHI customers ‘the more heat generated, the more funding’. The implication was clear: a product which cut their heating bill was going to reduce their income, so it wasn’t going to be attractive. At the meeting, it was suggested to her that if BS Holdings was to trial some of her promotional literature with its customers then the leaflets should be rewritten to remove the references to savings. Instead, the suggestion was that she should market her product to RHI users as a means of ensuring ‘control’ and ‘comfort’. But at the meeting with DETI officials, O’Hagan was told that it was their ‘assumption’ that if a business was going to invest in an expensive biomass boiler it would be the last stage of an attempt to become more environmentally friendly and would have been preceded by efforts to become more energy efficient.

Based on what they told O’Hagan, the civil servants don’t seem to have been able to comprehend that a business might be more interested in making easy money than cutting its carbon emissions. Yet the explanation which they gave to O’Hagan did not fully add up because in their own paperwork for the RHI scheme they had identified the risk of fraud and overcompensation. And it is harder still to understand why they were so dismissive of her central claim because by now Hutchinson, at least, had firm evidence about how the early claimants were using their boilers far more than had been anticipated. Although DETI’s small RHI team was not monitoring it in the hands-on way that Whitehall was examining trends in the GB scheme, they were receiving sufficient information in RHI’s first year to raise eyebrows.

As early as seven months into the scheme, Hutchinson was estimating that boilers could be used for as much as 35% of the year – more than double the 17% CEPA had estimated. It was also clear from the data coming through to DETI by then that the only real interest was in biomass. That in itself ought to have been a red flag because the scheme had been set up to incentivise a host of green technologies, and the subsidies were meant to have been calculated so that there would be no predominance of a single technology.

Hepper later told the public inquiry that O’Hagan had only raised ‘anecdotal’ evidence. She said that the businesswoman had been encouraged to contribute to a consultation on the expansion of the scheme. But when O’Hagan looked at the consultation, most of it related to the domestic scheme and she felt that she had already explicitly told the key DETI figures about the central problem. If they wouldn’t believe her when she told them in person, why would they react differently if she filled in a consultation response form? O’Hagan later told the inquiry: ‘I just keep thinking a blind man on a galloping horse would have seen it. You know, how could they not?’

It would be the emergence of O’Hagan’s email to Foster, three and a half years after it was sent, that would trigger former DUP minister Jonathan Bell to speak out and then the process of Foster’s toppling as First Minister, the collapse of Stormont and the public inquiry.

O’Hagan, who stressed that she had no political motive for what she did and who was not involved in the leaking of her email in December 2016, could never have imagined where her attempt to raise the alarm would lead. Although she later came to be referred to as a whistleblower – and at various points had later referred to herself as such – she told the inquiry that she did not think that she was in truth a whistleblower, because she was not blowing the whistle from the inside but was rather a ‘concerned citizen’ who could see there was a problem. For that reason, she did not seek anonymity when she approached the department. Her 2013 attempt to alert those in authority to the problem was the first of multiple efforts to get DETI to open its eyes to what was going on. The dismissive response from officialdom shook her confidence in the machinery of government. She later reflected: ‘It seems to me that the effective route is probably to go to the media.’

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The civil servants’ refusal to believe that RHI was open to widespread abuse makes even less sense because of something which had happened just three months before they met O’Hagan.

After receiving CEPA’s report on expanding RHI, DETI opened a public consultation about doing so. Yet, one section of the July 2013 document – some eight months after the scheme had opened – proved that there was an awareness of the need for cost controls and that Foster was personally aware of this. In a foreword to the 45-page document, Foster made clear that she knew about the potential costs of RHI ballooning out of control, and therefore her department was proposing measures to prevent that. She wrote: ‘I am conscious that whilst this is a sector that requires significant support, budget levels are finite and cannot be breached.’ The document dedicated an entire section to cost controls, saying that ‘a method of cost control is to be introduced that will ensure budgets are not overspent and will hopefully remove the need for emergency reviews’. It went on to set out in detail – an indication of how officials had engaged in considerable work on the subject – just how the various cost controls would operate.

The department proposed to follow GB’s system of degression ‘in the future’ but said that ‘in the interim it is proposed that a simpler system is put in place’. Setting out the precise situation, which would develop two years later, the department said:

Whilst tariffs are designed to ensure that the budget is adhered to there is always a risk that renewable heat technologies might be deployed in greater numbers than what is forecast and payments exceed expectations. The risk of this increases as tariffs become available for larger technologies such as biomass over 1MW, biomass/bioliquids, CHP and deep geothermal. Therefore DETI must retain the right to suspend the scheme if budget limits could be breached; however this will only happen at a last resort and, at this stage, is not envisioned to happen.

The 2013 consultation document led to the existing non-domestic RHI regulations being amended in several areas – each of which was far less important than the need for cost controls. The fact that this happened shows it would have been straightforward to amend the scheme at that point if the issue had been prioritised. It also proves that the need for cost controls was not somehow overlooked by a team of busy officials. They had not only understood the issue, but had put proposals to the public, which were then consciously not implemented. Stemming from that is an obvious question: given that the problem had been identified and a proposed solution worked out in great detail, why – and on whose instructions – was that proposal abandoned?

Two years later, the then head of DETI’s energy division, John Mills, found himself having to explain to Stormont’s Department of Finance how he had allowed RHI to run out of control with calamitous financial consequences. In the behind-closed-doors meeting – in which minutes were kept, perhaps because by that stage civil servants were now worried about where the blame would fall – he was asked why the 2013 recommendation for budgetary controls was never implemented. Mills claimed that it had been down to a conscious decision by Foster – an explosive allegation, given what was to follow.

Minutes of the meeting recorded him saying that ‘it was a ministerial decision to look at [opening] the domestic scheme rather than pushing through the trigger points [cost controls] on non-domestic which would have significantly delayed the implementation of the domestic scheme’. Mills, a veteran senior civil servant, then repeated that claim in public to an Assembly committee in February 2016, saying that ‘the minister decided that the priority should be on the introduction of the domestic RHI scheme. So resources were devoted to that’. But Foster always robustly disputed that she had ever been presented with a choice about either implementing cost controls or expanding the scheme.

Then, two and a half years after Mills made that potentially career-ending claim about Foster, he retracted it. When called before the public inquiry, which by that stage had uncovered hundreds of thousands of pages of documentation, shedding much more light on the situation than would have been apparent to Mills at the time, he said that there was no evidence to support what had been his belief at the time. His claim about Foster, he said, had been ‘completely incorrect’. Explaining his original comments, Mills said that when he arrived in DETI at the start of 2014 he felt that ‘the course was set’ to expand RHI rather than work on cost controls and he ‘assumed there was some ministerial authority for it’. However, he went on: ‘As part of the inquiry, as I gradually went hunting for what I imagined to be a submission for ministerial approval, I didn’t find one.’ He said that in his view ‘there is no evidence of the minister being asked to make that decision’. Mills accepted that he was ‘at fault’ for not asking to either see a piece of paper in early 2014 showing that the minister had agreed to what was happening or, if that had not happened, then putting a submission to Foster. However, even if Foster never explicitly asked to delay cost controls, her actions may still have – even inadvertently – had that effect. Just as her impatience to get the scheme launched in 2012 appears to have influenced officials to press ahead with what they knew was a flawed scheme, so now the minister’s eagerness to expand the scheme led to her officials believing that it was this which she was keenest to see done first.

Mills said that he made the expansion of the scheme the top priority for those under him in response to Foster’s desire for expansion. During meetings with Foster every six weeks, he recalled that ‘my impression during those discussions was the minister’s disappointment that the domestic RHI scheme was not ready’. Foster and Crawford’s frustration at the delay in launching the domestic RHI is recorded in their own handwriting in this period. On the face of a submission sent to them by Stuart Wightman in September 2014, which proposed that the scheme would launch in November, Crawford wrote: ‘Can we not open the scheme before November 2014?’ On another submission later that month, Crawford wrote by hand: ‘Need to get this launched.’ Two days later, Foster wrote by hand on the same submission: ‘Get this launched ASAP.’ There was unmistakable ministerial urgency to expand RHI – yet no urgency about introducing cost controls. While officials should have done far more to put before Foster the critical need for an emergency brake for the scheme, it is possible to see how they came to believe that her overwhelming priority was expansion in an attempt to increase expenditure – not doing something which might dampen demand.

Mills also said that when he joined the department at the start of 2014: