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Live Reporting

Robin Sheeran and Iain McDowell

All times stated are UK

  1. That's all for now...

    A broad, bright smile of relief lights up Mr Harnack's face when he's told that it's unlikely he'll have to come back to Belfast for another day in the hotseat.

    His wife is expecting a baby in a couple of months' time, and he says "it would be a relief" to her if he wasn't recalled to face more questions.

    Stormont's Parliament Buildings

    That's all from us for today and we're off to enjoy that quare wee stretch in the evening.

    Join us again tomorrow from 09:45 - bye for now!

  2. What happened today at the RHI Inquiry?

    BBC News Northern Ireland

    Civil servants were "furious" when they discovered the development costs for the RHI scheme looked set to double, the inquiry was told.

    £50 notes

    Fiona Hepper, the energy boss at DETI, demanded that costs be cut.

    In response the administration team "sharpened up" the estimates, cutting them by several hundred thousand pounds.

  3. 'Concern arose over application processing time'

    There was concern at Ofgem that its staff level was insufficient to cope with how long it could taking to process applications to the RHI scheme.

    Emails between Ofgem officials reveal that the applications in the similar GB scheme were taking longer to approve than was predicted, meaning that when the NI initiative opened the admin costs would likely be "substantially higher" than what DETI was quoted.

    People filling in an application form

    Mr Scoffield says a picture is emerging that Ofgem was going to have to "renegotiate" with DETI or have to "pare back" what it was able to do within the original budget.

    But Mr Harnack says the funding arrangement for Ofgem's work based on a flexible formula that would see it paid for whatever proportion of applications it handled, rather than receiving a fixed figure regardless of the volume of work.

  4. 'I apologised for shock of £700k cost'

    Ofgem reviewed its cost estimate and were able to give DETI a new figure of just over £430,000 for its work on the RHI scheme.

    Asked how he managed to pull the figure down from £700,000 so dramatically, Mr Harnack says he worked with Ofgem's IT team to "sharpen up" the estimate, resulting in the costs being "contained through smarter working".

    A man making calculatons

    Asked if he would've done that had Mrs Hepper not been so "furious", he says Ofgem would always have looked for the most "cost-effective" way of operating.

    He says he apologised to Mrs Hepper for the "shock" of discovering the £700,000 figure.

  5. 'Surprise over DETI's reaction of fury over cost'

    Mr Harnack says he was "surprised" by how "severe" Ms Hepper's "furious" reaction was when Ofgem outlined that the cost could hit £700,000.

    He says he believes there was "a misunderstanding" at DETI about what the contingency element of the cost estimate actually was and the department "had the wrong take on it".

    Sterling banknotes

    He explains that the £386,000 was simply the base of a cost range that went up to double that figure.

    There needed to be a 100% contingency allowance for the "uncertainties" there were surrounding the RHI scheme, he adds, and he believed Ofgem had been clear on that.

    He says Ms Hepper's supposedly sharp reaction was because DETI had only got approval to spend the lower figure.

  6. 'DETI energy boss furious about cost increase'

    Ofgem's had estimated in its feasibility study into the admin for the RHI scheme that development costs would be "£386,000, plus 100% contingency".

    Mr Scoffield says that DETI was working on the basis that the cost would be £386,000, but by late August 2012 Ofgem was indicating that the figure would be closer to £700,000.

    Fiona Hepper

    There was "a very concerned response" from DETI's energy boss Fiona Hepper (above), he says, and that was followed by a considerable exercise to quickly reduce the cost.

    In an email summarising a conversation Ms Hepper had with Ofgem, Mr Harnack said she was "quite frankly furious" to be told of the increase.

    He had also indicated to Ms Hepper that the £700,000 was within the 100% contingency and included IT and legal costs.

  7. 'No extra benefit to bespoke risk review'

    There was sense in Ofgem getting a joint independent risk assessment done of both the GB and NI RHI schemes because they were "for all intents and purposes identical", says Mr Harnack

    But Mr Scoffield picks up on a key difference them - different subsidy levels on offer - and asks was that not reason enough to stick with the original plan to conduct a separate, bespoke review of the NI initiative.

    Charts viewed through a magnifying glass

    Mr Harnack disagrees, saying that he can't see a benefit in a specific NI review because the overall assessment looked at "all the risks of all the schemes".

    Had the body doing the assessment "did the job that was intended" it would have "advised in all the risks", not just those common to both schemes.

  8. 'Combining scheme risk assessments saved costs'

    Mr Scoffield introduces some emails referring to "Project Woodwork".

    That was an exercise among Ofgem's team "to get people to... talk about or consider decisions, which had been made" that "might look to be at risk of coming back to haunt you".

    Keith Avis, one of yesterday's Ofgem witnesses, identified the cost of administering the Northern Ireland RHI scheme as something that might fall into the category of decisions that carried some risk.

    View across the senate chamber

    Mr Scoffield says it it appears that an independent risk assessment of the scheme was "pushed back and pushed back", and in the end it is "just combined with a GB risk assessment" to save costs.

    Mr Harnack says he doesn't think there was any "detriment" to the exercise by combining it with the GB risk assessment.

    "You get the benefits of having cost savings by doing both exercises at once," he says.

  9. 'Scheme monitoring board never came to pass'

    One of the suggestions raised to mitigate against some of the risks of the RHI scheme was to form a monitoring board that would closely scrutinise the initiative's operation and costs and make changes to it if necessary.

    But the board "didn't, at any stage, come to pass", says inquiry barrister Mr Scoffield.

    people in a meeting

    Mr Harnack says it could be the case that there was a legal need for Ofgem to have an "independence" from DETI, rather than be part of a "joint board with joint decision-making".

    He also says it could have been deemed that there was an alternative arrangement that was "just as effective".

    There were "regular weekly meetings" between Ofgem and DETI, he adds, and when big issues arose he and the department's energy boss Fiona Hepper worked through them together.

  10. 'Was attention paid to list of scheme risks?'

    A checklist

    Ofgem drew up a list of risks with the RHI scheme and ways to mitigate them, as the inquiry heard yesterday, and the document is returned to this afternoon.

    One question that the inquiry is looking to find an answer to is whether it was given the necessary attention after it was produced.

  11. That's lunchtime...

    A sandwich

    Mr Scoffield hasn't finished with the witness yet, but that's for the afternoon session - join us again at 14:00.

  12. 'We took comfort in assurance over scheme changes'

    DETI chose not to immediately make the changes to the RHI scheme that Ofgem was suggesting, but it did give a guarantee that it would do so "shortly after" the amendments were made to the GB initiative, says Mr Harnack.

    A boardroom

    A written assurance is recorded in minutes of a teleconference between the department and Ofgem in the summer of 2012, he adds.

    "By accepting and confirming those minutes they did give that written assurance," he tells the inquiry, and Ofgem "absolutely" took comfort from that.

  13. 'Proposal made to defer Ofgem taking on admin role'

    Mr Scoffield introduces a draft of Ofgem E-Serve's quarterly report in which legal adviser Marcus Porter suggested some amendments.

    Mr Porter wrote that it made little sense for DETI to simply replicate DECC's original GB RHI scheme regulations "given that the GB regulations are due to be revised three times by next July".

    David Scoffield QC

    He said that if DETI refused to await the DECC amendments he thought it "may be advisable" to defer taking over administrative responsibility for the Northern Ireland scheme "until after the amendments have been made".

    Mr Scoffield then reads the relevant part of the final version of the quarterly report, which makes no mention of Mr Porter's concerns and suggested course of action.

    Inquiry chair Sir Patrick Coghlin demands to know why that was the case, given that Mr Porter was "not a man to be trifled with", but the witness says he doesn't have an answer to that.

  14. 'United view over scheme legal concerns'

    The inquiry has heard that Ofgem "hammered home" in a teleconference in June 2012 concerns it had about DETI's decision not to add crucial amendments to the RHI scheme that DECC was making to the GB initiative.

    The better course of action, Ofgem advised, was for DETI to hold off on its scheme until it had made the changes to tighten it up, rather than opening it with weaknesses.

    Mr Scoffield describes that as a "milestone" moment and a "key point where DETI could and should have done something different" than what it opted to.

    Matthew Harnack

    He explains that DETI witnesses Peter Hutchinson and Fiona Hepper have suggested there were "mixed messages" on the matter from Ofgem, with its admin branch siding with DETI but the legal side disagreeing.

    Mr Harnack says he doesn't recognise that and says there was a "united point of view" from both Ofgem branches.

    Ofgem adopted its stance, he says, because was "pretty clear" that the changes would've made DETI's scheme "more robust".

  15. 'Not appropriate to tell DETI of scheme changes'

    The Great Britain RHI scheme was set up by the Department of Energy & Climate Change (DECC) and was running before the Northern Ireland initiative, which was based on the GB model, was set up.

    In spring 2012, DECC decided to make some crucial changes to its scheme, including the addition of cost controls.

    As Ofgem was administering the GB scheme, Mr Harnack is asked what action his organisation took to inform DETI about DECC's planned changes.

    People looking at charts

    He explains that at the time the changes first arose, Ofgem was not being engaged or paid by DETI and so it didn't feel it was "appropriate" to tell them.

    Besides, he adds, DETI was in direct contact with DECC and Ofgem understood that the Stormont department had found out about the changes directly from Whitehall.

    He adds that when DETI re-engaged Ofgem in May that year, the administrators told the department about the changes and asked what it wanted to do about them.

  16. 'How did that creep in?!'

    Everything in Northern Ireland boils down to orange and green, some might say, and in a light moment it appears that the RHI Inquiry is no different.

    An orangeman

    Making a reference to Ofgem's logo, Dr Keith MacLean refers to the colours.

    Sir Patrick Coghlin jokes: "How did orange and green creep in?!"

  17. 'E-Serve responsible for scheme non-compliance'

    There's a fairly lengthy back-and forth between Mr Harnack, chair Sir Patrick and inquiry panel member Dr Keith MacLean about the roles of Ofgem's E-Serve administration division and the more traditional regulatory part of Ofgem when it comes to enforcement of the RHI scheme rules.

    A biomass boiler

    Eventually, Mr Harnack explains: "In terms of renewable heat and taking follow-up action on anyone who wasn't complying with the requirements of the RHI regulations it was all done within E-Serve."

  18. 'RHI claimants set to challenge court ruling'

    Conor Macauley

    BBC News NI agriculture and environment correspondent

    Away from the RHI Inquiry in the Senate chamber, a group of scheme claimants say they are to lodge an appeal against a court decision that left them on reduced tariffs.

    The Renewable Heat Association lost a case last month in which they had challenged the reduced tariffs resulting from the addition of temporary cost controls.

    A biomass boiler

    Stormont's Department for the Economy argued it was necessary to have a capped subsidy to protect the public purse from a projected overspend estimated at £700m over 20 years.

    The judge found in the department's favour, meaning that a reduced tariff introduced last year was allowed to stand.

  19. 'DETI couldn't forecast number of applications'

    During the first year of operation the amount that Ofgem charged for administering the RHI scheme was very low and was charged according to the number of registrations, says Mr Harnack.

    As far as DETI was concerned the scheme "operating costs would have been very good value for money," he adds.

    Mr Harnack

    And for Ofgem: "We got paid back... what it cost us to develop, so we're happy".

    The witness says that Ofgem expected DETI to supply a forecast for the uptake of the scheme, but it "couldn't provide numerical forecasts" on applications.

    "What they said to us on a couple of occasions was that they expected the take up to be 3% of [the GB RHI scheme]."

  20. 'Scheme caused headaches; work is small fry'

    As early as February 2013 - by which time the RHI scheme has been running for a just a few months - Ofgem had faced "headaches" in dealing with DETI.

    Mr Harnack used that term in an email to an Ofgem colleague , adding that he "would be reluctant to take on anything else" for DETI and further work would be "just such small fry that it isn't worth the hassle".

    An email inbox

    That is one document that could suggest that the scheme was "somewhat of a low priority for Ofgem", says Mr Scoffield.

    Explaining his choice of phrasing, Mr Harnack says it was made in the "heat of the moment" and he outlines that his view was that setting up the initiative and agreeing with DETI on tricky issues had not been "not as easy as we'd forseen".