Neutral Citation No:  NIQB 23
Judgment: approved by the Court for handing down
(subject to editorial corrections)*
"…. to refuse an appeal in respect of – and thereby refuse accreditation of a facility – under the Renewable Heat Incentive Scheme Regulations (NI) 2012."
The thrust of the Applicant's case is that the impugned decision is vitiated by the Respondent's failure to take into account certain material information.
The RHI Scheme
"(a) Establishing a scheme to facilitate and encourage renewable generation of heat in Northern Ireland, and
(b) About the administration and financing of the Scheme."
"GEMA" denotes the Gas and Electricity Markets Authority, a body corporate established under section 1 of the Utilities Act 2000. Section 114(1) of the Parent Statute provides:
"GEMA and a Northern Ireland authority may enter into arrangements for GEMA to act on behalf of the Northern Ireland Authority for, or in connection with, the carrying out of any functions that may be conferred on the Northern Ireland Authority under, or for the purposes of, any scheme that may be established under section 113."
The Respondent is encompassed by the definition of "Northern Ireland Authority".
"(1) These Regulations establish an incentive scheme to facilitate and encourage the renewable generation of heat and make provision regarding its administration.
(2) Subject to Part 7 and regulation 24, the Department must pay participants who are owners of accredited RHI installations payments, referred to in these Regulations as "periodic support payments", for generating heat that is used in a building for any of the following purposes—
(a) heating a space;
(b) heating liquid; or
(c) for carrying out a process.
(3) Subject to Part 7, the Department must pay participants who are producers of biomethane for injection periodic support payments."
"(1) A plant meets the criteria for being an eligible installation (the "eligibility criteria") if—
(a)regulation 5, 6, 7, 8, 9, 10 or 11 applies;
(b)the plant satisfies the requirements set out in regulation 12(1);
(c)regulation 15 does not apply; and
(d)the plant satisfies the requirements set out in Chapter 3.
(2) But this regulation is subject to regulation 14."
"(1) The requirements referred to in regulation 4(b) are—
(a)installation of the plant was completed and the plant was first commissioned on or after 1st September 2010;
(b)the plant was new at the time of installation;
(c)the plant uses liquid or steam as a medium for delivering heat to the space, liquid or process;
(d)heat generated by the plant is used for an eligible purpose."
"(1) An owner of an eligible installation may apply for that installation to be accredited.
(2) All applications for accreditation must be made in writing to the Department and must be supported by—
(a) such of the information specified in Schedule 1 as the Department may require;
(b) a declaration that the information provided by the applicant is accurate to the best of the applicant's knowledge and belief;
(c) a declaration that the applicant is the owner, or one of the owners, of the eligible installation for which accreditation is being sought.
(3) The Department may, where an eligible installation is owned by more than one person, require that—
(a) an application submitted under this regulation is made by only one of those owners;
(b) the applicant has the authority from all other owners to be the participant for the purposes of the scheme; and
(c) the applicant provides to the Department, in such manner and form as the Department may request, evidence of that authority.
(4) Before accrediting an eligible installation, the Department may arrange for a site inspection to be carried out in order to satisfy itself that a plant should be accredited.
(5) The Department may, in granting accreditation, attach such conditions as it considers to be appropriate.
(6) Where an application for accreditation has, in the Department's opinion, been properly made in accordance with paragraphs (2) and (3) and the Department is satisfied that the plant is an eligible installation the Department must (subject to regulation 23 and regulation 46(3))—
(a) accredit the eligible installation;
(b) notify the applicant in writing that the application has been successful;
(c) enter on a central register maintained by the Department the applicant's name and such other information as the Department considers necessary for the proper administration of the scheme;
(d) notify the applicant of any conditions attached to the accreditation;
(e) in relation to an applicant who is or will be generating heat from solid biomass, having regard to the information provided by the applicant, specify by notice to the applicant which of regulations 28 or 29 applies;
(f) provide the applicant with a written statement ("statement of eligibility") including the following information—
(i) the date of accreditation;
(ii) the applicable tariff;
(iii) the process and timing for providing meter readings;
(iv) details of the frequency and timetable for payments; and
(v) the tariff lifetime and tariff end date.
(7) Where the Department does not accredit a plant it must notify the applicant in writing that the application for accreditation has been rejected, giving reasons.
(8) Once a specification made in accordance with paragraph (6)(e) has been notified to an applicant, it cannot be changed except where the Department considers that an error has been made or on the receipt of new information by the Department which demonstrates that the specification should be changed."
"(1) The Department must not accredit an eligible installation unless the applicant has given notice (which the Department has no reason to believe is incorrect) that, as applicable—
(a) no grant from public funds has been paid or will be paid or other public support has been provided or will be provided in respect of any of the costs of purchasing or installing the eligible installation; or
(b) such a grant or support was paid in respect of an eligible installation which was completed and first commissioned between 1st September 2010 and the date on which these Regulations come into force, and has been repaid to the person or authority who made it.
(2) In this regulation, "grant from public funds" means a grant made by a public authority or by any person distributing funds on behalf of a public authority and "public support" means any financial advantage provided by a public authority.
(3) The Department must not accredit an eligible installation if it has not been commissioned.
(4) The Department may refuse to accredit an eligible installation if its owner has indicated that one of the applicable ongoing obligations will not be complied with.
(5) The Department may refuse to accredit a plant which is a component plant within the meaning of regulation 14(2)."
In passing, Regulation 26 makes provision for the grant of "preliminary accreditation" to a person who proposes to construct or operate an eligible installation which has not yet been commissioned, subject to certain requirements and limitations.
 Part 4 assembles a series of provisions under the rubric of "Ongoing obligations for participants". These make clear that one of the central aims of the statutory scheme is "the use of solid biomass to generate heat". Consistent with this, there are significant restrictions on the permitted use of fossil fuel. There is a series of general obligations which all participants must observe.
"Participants must comply with the following ongoing obligations, as applicable—
(a) they must keep and provide upon request by the Department records of type of fuel used and fuel purchased for the duration of their participation in the scheme;
(b) they must keep and provide upon request by the Department written records of fossil fuel used for the permitted ancillary purposes specified in Chapters 1 and 2;
(c) they must submit an annual declaration as requested by the Department confirming, as appropriate, that they are using their accredited RHI installations in accordance with the eligibility criteria and are complying with the relevant ongoing obligations;
(d) they must notify the Department if any of the information provided in support of their application for accreditation or registration was incorrect;
(e) they must ensure that their accredited RHI installation continues to meet the eligibility criteria;
(f) they must comply with any condition attached to their accreditation or registration;
(g) they must keep their accredited RHI installation maintained to the Department's satisfaction and keep evidence of this including service and maintenance documents;
(h) participants combusting biogas must not deliver heat by air from their accredited RHI installation to the biogas production plant producing the biogas used for combustion;
(i) they must allow the Department or its authorised agent reasonable access in accordance with Part 9;
(j) participants generating heat from solid biomass must comply with the regulation specified by the Department in accordance with regulation 22(6)(e);
(k) they must notify the Department within 28 days where they have ceased to comply with an ongoing obligation or have become aware that they will not be able so to comply, or where there has been any change in circumstances which may affect their eligibility to receive periodic support payments;
(l) they must notify the Department within 28 days of the addition or removal of a plant supplying heat to a heating system of which their accredited RHI installation forms part;
(m) they must notify the Department within 28 days of a change in ownership of all or part of their accredited RHI installation;
(n) they must repay any overpayment in accordance with any notice served under regulation 47;
(o) they must, if requested, provide evidence that the heat for which periodic support payments are made is used for an eligible purpose;
(p) they must not generate heat for the predominant purpose of increasing their periodic support payments;
(q) they must comply with such other administrative requirements that the Department may specify in relation to the effective administration of the scheme."
Alertness to certain of the definitions in Regulation 2 is required:
"'date of accreditation'", in relation to an accredited RHI installation, means the later of—
(a) the first day falling on or after the date of receipt by the Department of the application for accreditation on which both the application was properly made and the plant met the eligibility criteria; and
(b) the day on which the plant was first commissioned;
"date of registration", in relation to a producer of biomethane for injection, means the first day falling on or after the date of receipt by the Department of the application for registration on which the application was properly made;
"the Department" means the Department of Enterprise, Trade and Investment;
"eligibility criteria" has the meaning given by regulation 4;
"eligible installation" means a plant which meets the eligibility criteria;
"eligible purpose" means a purpose specified in regulation 3(2); "
"tariff start date" means the date of accreditation of an eligible installation or, in relation to a producer of biomethane, the date of registration."
The "tariff lifetime" is defined as:
"The period for which periodic support payments are payable for that installation."
Periodic support payments are governed by Regulation 36. It suffices to note the first three paragraphs:
"(1) Periodic support payments shall accrue from the tariff start date and shall be payable for 20 years.
(2) Periodic support payments shall be calculated and paid by the Department.
(3) Subject to regulation 42(5) and paragraph (7) the tariff for an accredited RHI installation shall be fixed when that installation is accredited."
"(1) Any prospective, current or former participant affected by a decision made by the Department in exercise of its functions under these Regulations (other than a decision made in accordance with this regulation) may have that decision reviewed by the Department.
(2) An application for review must be made by notice in such format as the Department may require and must—
(a) be received by the Department within 28 days of the date of receipt of notification of the decision being reviewed;
(b) specify the decision which that person wishes to be reviewed;
(c) specify the grounds upon which the application is made; and
(d) be signed by or on behalf of the person making the application.
(3) A person who has made an application in accordance with paragraph (2) must provide the Department with such information and such declarations as the Department may reasonably request in order to discharge its functions under this regulation, provided any information requested is in that person's possession.
(4) On review the Department may—
(a) revoke or vary its decision;
(b) confirm its decision;
(c) vary any sanction or condition it has imposed; or
(d) replace any sanction or condition it has imposed with one or more alternative sanctions or conditions.
(5) Within 21 days of the Department's decision on a review, it must send the applicant and any other person who is in the Department's opinion affected by its decision a notice setting out its decision with reasons."
The second is the publication of procedural guidance under Part 11.
"The Department must publish procedural guidance to participants and prospective participants in connection with the administration of the scheme."
Finally, paragraph 1(1) of Schedule 1, regulates the provision of information by prospective participants to the Department. Paragraph 1(1) provides:
"This Schedule specifies the information that may be required of a prospective participant in the scheme."
The detailed list which follows in paragraph 1(2) has two particular components in the context of the present challenge.
"(2) The information is, as applicable to the prospective participant –
(k) Evidence which demonstrates to the Department's satisfaction the installation capacity of the eligible installation;
(w) Such other information as the Department may require to enable it to consider the prospective participant's application for accreditation or registration."
The Departmental/GEMA Statutory Arrangements
The Statutory Guidance
"The Northern Ireland Renewable Heat Incentive (NIRHI) is a financial incentive scheme designed to increase the uptake of renewable heat technologies and reduce the UK's carbon emissions. Broadly speaking, the scheme provides a subsidy per KWHTH of eligible renewable heat generated from accredited installations and a subsidy payable to producers of biomethane for injection ….
The scheme supports non-domestic renewable heat installations and the production of biomethane for injection into the gas grid."
Accreditation is dependent upon OFGEM being satisfied that an application (a) meets the eligibility criteria and (b) is properly made (see paragraph 2.1). The text continues (paragraph 2.3):
"In order to gain accreditation for an installation, an applicant will have to demonstrate to OFGEM that an installation meets the NIRHI eligibility criteria …."
Paragraph 2.9 states:
"Accreditation can only be received once an eligible installation has been commissioned."
Per paragraph 2.13:
"You must ensure that the information you submit is accurate."
By paragraph 2.14:
"Once you have submitted your application and your identity and bank details have been verified, OFGEM will then review all the information before making a decision as to whether the installation can be accredited. In some cases, they will need to contact you for further information to enable them to verify eligibility."
(i) OFGEM can be required to review any decision made by it in the exercise of the functions conferred upon that agency by the instrument noted in  above.
(ii) It is explicitly provided that this is additional to the statutory review function exercisable by the Department under Regulation 50 (one of the reserved functions). The former is accorded the distinguishing taxonomy of "formal review".
(iii) It is expressly contemplated that the formal review will be the first remedy pursued by the dissatisfied party, in the hope that it will obviate the need to resort to the statutory review.
(iv) The OFGEM formal review will entail the reconsideration of all information previously provided, the consideration of "further information" supplied and the examination of all representations made by the interested party.
(v) The provision of "further information" may be either spontaneous or upon request by OFGEM.
(vi) Every review request is allocated to an officer who will "…. aim to reach a decision within 20 working days …." .
(vii) A statutory review may be requested where the interested party is dissatisfied by the outcome of the formal review.
(viii) The statutory review "…. will be based on all the evidence, information and representations submitted by the affected person to the original decision maker or OFGEM's (Formal Review Officer). In addition, OFGEM may request on DETI's behalf such information and declaration relating to information within the affected person's possession as DETI require to determine the review."
(ix) DETI aspires to complete its statutory review within a period of 30 days.
(x) The possible outcomes of the statutory review include affirmation, revocation or variation of the impugned decision.
The Underlying Decisions
(i) The OFGEM initial decision, dated 15 August 2016, made on behalf of the Respondent, refusing the Applicant's application for accreditation.
(ii) The subsequent OFGEM formal review decision, dated 06 February 2017, affirming its original decision.
(iii) The Respondent's statutory review decision, dated 15 May 2017, concurring with the original OFGEM decision.
(i) On 15 November 2015 the Applicant submitted its completed online application for accreditation under the RHI Scheme.
(ii) On 22 February 2016 OFGEM requested the Applicant to provide further specified information.
(iii) On 21 March 2016 the Applicant's agent responded on their behalf, the response taking the form of an amended online application form.
(iv) On 15 August 2016 OFGEM notified its refusal decision.
(v) By a letter dated 29 August 2016 the Applicant purported to provide OFGEM with clarification and further information, including certain documentary attachments (new documents provided for the first time). By the same letter, the Applicant requested a "formal review".
(vi) By an email dated 24 October 2016 the Applicant purported to provide certain further information and clarification:
"… you queried why invoices for January/February/March 2016 were not issued until 4th April 2016 …
A delay like this is a typical occurrence in the implementation and bedding in of a new project. We wanted to ensure that the following criteria were being satisfied:
- that the quality of the product was to the standard required by the purchasing party [and]
- that the volumes and method of delivery was [sic] satisfactory to the purchasing party …
It was agreed between the parties that invoices would be issued once these teething issues were resolved and we got the all clear to commence invoicing at the start of April."
(vii) By its letter dated 06 February 2017 OFGEM informed the Applicant that it was affirming its original decision.
(viii) By letter dated 02 March 2017 the Applicant requested a statutory review.
(ix) By its letter dated 15 May 2017 the Respondent, pursuant to (ix), affirmed the original OFGEM decision.
"Your application for accreditation was rejected for the following reasons: pursuant to Regulation 23(4) ……….. OFGEM may refuse to accredit an eligible installation if its owner has indicated that one of the applicable ongoing obligations will not be complied with. It is our opinion that your installation is not compliant with Regulation 33(p) ………. The submitted schematic and site images demonstrate that wood chip drying is the only heat use at this site ….
As the wood chip is only being dried for the purpose of combustion within this installation and other installations at this site, and those other installations are in turn being used to dry wood chips for use in this installation and others, it is our opinion that the installation is used solely for the purpose of generating heat for the predominant purpose of increasing periodic support payments. Based on your description of the installation, its uses and supporting documentation, it is our opinion that you will be unable to comply with Regulation 33(p)."
"The wood chip is being dried for use to feed the biomass boilers to dry wood chip. The wood chip, when used, is transported to the feed hopper and is at ambient temperature when used. It is envisaged that wood chip will be produced for sale for commercial purposes, but as of yet no sales of wood chip have been made from this site."
Pausing, the above passage was the Applicant's response to OFGEM's request for further information, which included the following:
"Please confirm if the wood being dried is used/fed to the system or sold to customer. If so, please confirm ……… if the wood being dried is cooled before they are fed into the boiler. Please provide evidence that the drying was for commercial purpose. This may be in form of invoice (showing the dried product was the subject of a commercial transaction), website, photos …."
The response (quoted) was made on 21 March 2016.
"This statement was correct at the time of application as the plant had only been commissioned and no sales of wood chip had been made at that point. However, your determination assumes the dried wood chip is used to fuel the drying floor plants exclusively and totally ignores the statement 'it is envisaged that wood chip will be produced for sale for commercial purposes' which clearly indicates the commercial aspect of the site. Subsequent to the initial application, the site has produced for sale, up to end of June 2016, 542.93 tonnes of 25% moisture content wood chip. This wood chip has been sold to Irish Wood Chipping Services Limited and we also have a Memorandum of Agreement with this organisation to supply 1,500 tonnes …. on an annual basis. We attach to this correspondence evidence of sales since January 2016 to date and also the Memorandum of Agreement …
In addition, we are seeking to develop additional markets and are targeting that the facility will have the capacity to produce up to 4,000 tonnes per annum….
In summary, it can clearly be demonstrated that the sole purpose of this facility is to dry wood fuel as dictated by our current supply and ongoing obligations, thereby reinforcing the eligible use of generated heat for the production of fuel for commercial purposes which is in the spirit of the ongoing obligations of a compliant NIRHI installation."
"Dry wood chip (MC 25%) …. January 16: 71.86 tonnes …. Contract price £80/tonne."
The remaining five invoices have the same format, with differing content. The first three invoices, while issued on the same date, specify goods provided during the months of January, February and March 2016. The second three invoices specify goods provided during the immediately preceding month. The total amount allegedly invoiced and paid is approximately £43,000.
"As stated in your formal review request, you envisaged that the site would be used for commercial purposes, but at point of application you have no evidence to show that the site was commercially viable. To evidence the commerciality aspect, you have supplied invoices as part of your formal review letter which clearly states the earliest invoice as 06 April 2016, whilst your application is dated 15 November 2015 …
For OFGEM to determine eligibility of the commercial nature of the site, the invoices would need to have been produced at point of application and had to relate to commercial use prior to the application ….
On that basis, I am satisfied that the original decision is correct and appropriate based on its individual facts …."
The decision maker elaborates thus:
"The information that was supplied in support of the applications stated that the wood drying activity would be cyclical as opposed to commercial use or use for space or water heating. Therefore, it was right to conclude that if RHI support was provided for the activity, it would be subsidising heat that was produced for the predominant purpose of increasing RHI payments. There was no other purpose or utility identified in drying the wood. That, too, is addressed in the regulations in the form of an ongoing obligation (regulation 33(p)) that would not have been complied with in this case ….
In addition, there was no evidence that heat generated by the installations would be used for an eligible purpose."
"It was only on 15 September 2016 …. that any evidence of eligible heat use was supplied. The evidence that was supplied was in the form of a contractual arrangement dated 03 November 2015 and a series of invoices apparently in relation to wood drying pursuant to those contractual arrangements that had commenced by, at the latest, January 2016 ….
Had this information and evidence been supplied with the applications, or had it been supplied whilst the applications were receiving consideration by OFGEM, the concerns in relation to eligible heat use and hence the basis on which the applications were eventually rejected may not have arisen."
Referring to the date of the OFGEM refusal decision, 06 May 2016, the decision maker states emphatically:
"The evidence that was supplied to OFGEM in relation to heat use in fact suggested that no eligible heat use was taking place. The Regulations require that OFGEM should assess an application that is submitted to it on the strength of the evidence and information supplied – and this is what our decision was based on."
Next, twice using the adjective "inconsistent", the decision maker notes (a) the disparities between the information supplied with the original application and the further information provided in March 2016, when requested and (b) the disparities between the information supplied on each of the aforementioned dates and the new information accompanying the review request of September 2016. Finally, the decision maker reiterates:
"An eligible heat use should be capable of taking place at the time that an application is made …
The Regulations specifically link the eligibility of an installation to the heat demand that it will meet and the strength of this requirement would be diluted if a proposal of future or intended heat use was sufficient."
"The statutory review will be based on all the evidence, information and representations submitted …. to OFGEM …."
The ensuing review decision expresses the purpose of the exercise in these terms:
"…. to consider a decision made by OFGEM in relation to the above numbered applications, in the light of the Regulations and all other available evidence, and conclude whether the original decision maker erred in coming to the conclusion not to allow the applications."
"OFGEM were under a duty to perform their role on the basis of the information supplied at the time of application. OFGEM, as a matter of good practice, may seek further information where there was ambiguity or lack of clarity in the original application ….
The panel concluded that, in this case, no such ambiguity existed. The intended purpose was clearly stated and while the information provided may, in hindsight, have been incorrect, it was not unclear. OFGEM were therefore under no duty to seek further clarity and could not have been expected to do so …..
The panel concluded that the applicant provided clear detail within their applications of intended use – a use that on the clear terms provided was not an eligible use …. [as it] … would prevent the applicant from complying with their ongoing obligations as per regulation 33(p) ….
The panel concluded that OFGEM therefore acted reasonably in rejecting the applications based on the information available … when their decision was made …
The later provision of information which may have suggested a use that did not fall foul of the Regulation 33(p) does not of itself invalidate the earlier decision ….
In light of the facts of the case the panel agreed unanimously that OFGEM's decision was therefore both reasonable and correct on the evidence provided at the time of application and therefore agreed unanimously to confirm OFGEM's original decision."
Consideration and Conclusions
"The statutory review will be based on all the evidence, information and representations submitted by the affected person to the original decision maker or OFGEM's FRO [Formal Review Officer]."
The words "based on" cannot in my view either undermine the parent statutory model or commit the Department to any particular outcome. Rather, this uncluttered statement simply proclaims that the review exercise will consider all previously generated information.
This chapter provides guidance …………..
12.26 …………… The Northern Ireland Ombudsman."
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