27. Before we decide if we should conduct a detailed investigation of a complaint, we look at whether there are signs the organisation has got something wrong. We do this by comparing what should have happened with what did happen.
28. It is important to note that, before applying to the DRHI scheme (and until it’s closure on 31 March 2022) Ofgem strongly recommended that prospective applicants thoroughly read the DRHI Essential Guide.
29. This guide provides comprehensive information on eligibility criteria, pre-application requirements, the application process, and the ongoing obligations that participants must fulfil, once their heating system (biomass plant) is accredited.
30. The Domestic Renewable Heat Incentive Scheme Regulations 2014 (The Regulations 2014 as amended) sets out the conditions for accreditation, ongoing participation, and compliance requirements.
31. It is important to note, that, the commissioning date is the date that the installer carries out the required testing, and confirms that the biomass plant is safe, functional, and available for use. For the purposes of MCS certification and government support schemes, it is the commissioning date that is treated as the official start date of the biomass plant.
32. Under Regulation 2 of The Regulations 2014 (as amended) it says, the ‘first commissioning date’ means the date on which a plant is first commissioned. This is the date a biomass plant is deemed functional, and available to use.
33. Following a site audit conducted on 22 August 2023, Ofgem concluded that Mr X’s accreditation application for the DRHI scheme, was submitted more than 12 months after the biomass plant began providing heat.
34. In its audit findings letter dated 12 December 2023, Ofgem confirmed that ‘non-compliance’ was found. It determined that two MCS certificates were associated with the biomass plant installed at his property. The first recording a commissioning date of 17 March 2016, and the second recording a commissioning date of 6 September 2017.
35. Ofgem also confirmed that, during the site audit, the insurance policy document completed by the installation company evidenced the installation date of 4 March 2016, and that a photograph of the biomass plant displaying a commissioning sticker dated 9 March 2016, further verified the plant’s installation date.
36. In addition, an MCS compliance certificate relating to the first MCS certificate stating the commissioning details of the system, dated as 18 March 2016. Ofgem confirmed that there was no available MCS compliance certificate relating to the second MCS certificate.
37. In its audit findings letter Ofgem stated, ‘When asked to explain the discrepancy in MCS certification dates, and the installation dates written on the above documents you stated that the initial installers of the plant went bankrupt, and you employed a second company to complete the installation. However, you did not provide any evidence or details regarding these events when requested’.
38. Ofgem added, ‘If we take 17/03/2016 to be the first commissioning date, as stated on [the first MCS] it does not meet regulation 17(4) of the DRHI Scheme Regulations 2014, as amended which states that an application must be received within 12 months of this date. You did not apply until 07/09/2017, this is more than 12 months from the first commissioning date. If, however, we take 06/09/2017 to be the first commissioning date, as stated on [the second MCS] then it does not meet regulation 9 of the DRHI Scheme Regulations 2014, as amended which states that no part of the plant which generates heat can be used prior to the plant’s first commissioning date. In either scenario, your plant does not meet the eligibility criteria for the Domestic RHI Scheme, and your accreditation will be revoked’.
39. It is important to note that, when Ofgem considers an application for accreditation onto the DRHI scheme, the primary dates taken into account are the commissioning date and the application submission date. The commissioning date recorded on the commissioning certificate, represents the day the system was made operational, and serves as the point of eligibility.
40. Under regulation 17(4) of The Regulations 2014 (as amended) it says that an application for accreditation on to the DRHI scheme must be received within 12 months of the commissioning date, for the biomass plant.
41. The evidence indicates that, the commissioning date was around 17 March 2016. In order for the biomass plant to be eligible for the DRHI scheme, Mr X was required to submit his accreditation application no later than 17 March 2017.
42. As the application was not submitted until 7 September 2017, this falls outside the required 12 month timeframe set by Ofgem’s regulations, meaning that the biomass plant was never eligible for accreditation, under the DRHI scheme.
43. We understand that Mr X ‘engaged a company’ to manage the installation of the biomass plant and ‘assist’ with the DRHI application. We recognise that Mr X maintains he was completely unaware of the earlier MCS certificate and that he had no knowledge of its existence, which must have been both confusing and frustrating for him.
44. As Ofgem were also not initially aware of the existence of the earlier MCS certificate at the time of the submission in September 2017, Mr X’s application for accreditation was approved.
45. We understand that at this stage, Mr X would have reasonably presumed that everything was in order, given that his application had been approved, and he was in receipt of RHI payments, which understandably would have provided him with reassurance.
46. However, during the site audit carried out in 2023, the earlier commissioning date for the biomass plant was identified. This discovery established that the accreditation application had been submitted outside the 12 month eligibility period, resulting in Mr X’s accreditation being revoked, and Ofgem advising that the payments already received would need to be recovered, as a result.
47. Ofgem also explained that even if it took the 6 September 2017 as the commissioning date, the biomass plant would still not be eligible, as this would mean that the plant had been used prior to the commissioning date.
48. Under Regulation 9 of The Regulations 2014 (as amended) it says no part of the plant which generates heat can be used prior to the plant’s first commissioning date. This therefore also deems that the biomass plant would not be eligible for this reason if the September date, was deemed as the commissioning date.
49. Ofgem confirmed that in either scenario, the biomass plant does not meet the eligibility criteria for the DRHI scheme.
50. Under our Principles of Good Administration – being open and accountable, we expect organisations to be open and truthful when accounting for their decisions. They should state their criteria for their decision making and give reasons for their decisions. We can see that Ofgem have acted in line with our expectations, here.
51. Ofgem’s DRHI Essential Guide – failure to comply with ongoing obligations says, It’s important that participant’s meet the ongoing obligations, for as long as they are a participant on the scheme. Ofgem adds that if non-compliance is confirmed, it may;
•Revoke the installation’s accreditation •Recover overpayments.
52. We can see that due to the ‘non-compliance’ highlighted during the site audit, and in line with its guidance, Ofgem revoked Mr X’s accreditation and sought to recover the overpayments.
53. Under regulation 60 of The Regulations 2014 (as amended) when Ofgem is satisfied that a participant was paid because their system was accredited, using information that later turned out to be wrong, in an important way, Ofgem can take steps to recover the overpayments.
54. Under The Regulations 2014 (as amended) Ofgem, as the scheme administrator, is responsible for safeguarding public funds. If following an audit, it is determined that a participant has not complied with the scheme requirements and payments have already been made, Ofgem is entitled to take action to recover those payments. This process ensures that public funds are used appropriately, and that any financial support provided under the scheme is only retained by participants who meet all eligibility and compliance criteria.
55. This is in line with our Principles of Good Administration getting it right – under which we expect organisations to spend public money with care and propriety. Seeking to recover the overpayments made to Mr X, is in line with both Ofgem’s responsibilities and our expectations.
56. We note that Mr X emailed Ofgem on 12 February 2024 with comments on Ofgem’s decision to revoke his accreditation. He unfortunately did not complete the review request form, at that time, as advised in Ofgem’s audit letter. Mr X’s email was therefore recognised as a complaint, to which Ofgem responded to on 29 February, reiterating the information contained within its audit findings letter.
57. We are aware that, Mr X submitted his review request application on 2 May 2024. Mr X also confirmed within this request, that the biomass plant was ‘installed in 2016’ an MCS certificate was issued and ‘an application was made to enrol onto the scheme’. Mr X states that following a period of months, and having received no payments he contacted the installation company, to query why he had not received any payments. Mr X states that he was advised that he would ‘need to reapply’.
58. We are aware that, Mr X’s accreditation application was submitted (on his behalf) on 7 September 2017. He confirms he then received a ‘further’ MCS certificate and began receiving payments.
59. Under Regulation 62 of The Regulations 2014 (as amended) a participant who is aggrieved by a decision made by Ofgem, has a right of review. The application must be submitted to Ofgem within 28 days of the date of receipt of the letter. Under this regulation, Ofgem has no powers to accept a review request that has been submitted past the ‘28 day’ review deadline.
60. The evidence shows that Mr X submitted his right of review request, almost four months outside of the deadline date of 9 January 2024. He explained this was due to having ‘four viruses from November 2023’ rendering him ‘bed ridden’.
61. Although we acknowledge the reason for the delayed submission, as the accreditation application was submitted outside the ‘28 day window’ stipulated in its guidance, Ofgem informed Mr X that it could not make any exceptions, and the review request was therefore declined.
62. The evidence shows that Ofgem acted in accordance with its own guidance when declining the appeal and we cannot say that Ofgem’s decision was unreasonable.
63. We acknowledge that Mr X stated he did not submit the application himself, and that this would have come as a great shock to him, receiving this information, when he presumed everything was okay due to receiving the payments, following the application submission in September 2017.
64. However, as Mr X is the participant, he is still obligated to repay the amount of £37,190.21 which Ofgem says has ‘exceeded his entitlement’.
65. Whilst we empathise with Mr X’s situation and understand that he is seeking for the repayment requirement to be removed, this is not an outcome that can be achieved.
66. Although it is regrettable that a debt has arisen, and we fully acknowledge that Mr X engaged a company (which has since gone into liquidation) to assist with the application, we recognise that he understandably feels ‘penalised’ for an error which he maintains he did not make himself. Regrettably, despite his understandable frustration and the circumstances in which he acted in good faith, the amount remains recoverable and must still be repaid to Ofgem.
67. We can see that Ofgem has given Mr X the option of setting up a repayment plan if the amount cannot be paid in full. This is the type of action we would have expected Ofgem to take, in circumstances where a participant is required to repay a substantial amount.
68. We sympathise with Mr X, and fully recognise that this has been an exceedingly difficult time for him, and we do not wish to diminish the impact that this situation has had on him.
69. In summary, we have decided to take no further action on this complaint. This is because we can see that Ofgem acted in accordance with its own guidance when reaching its decision to revoke Mr X’s accreditation and recover the overpayment. Ofgem have also advised that a repayment plan can be set up to assist Mr X in making payments, over a period of time. We would not have expected Ofgem to have done anything more.
70. We thank Mr X for bringing his concerns to our attention, and wish him well for the future.