A whistleblower has alleged that Ofgem overlooks exploitation of green energy schemes.
The allegations made by former counter-fraud officer Ed Fyfe point to the misspending of public money running into the millions. Fyfe claims that firms were profiteering from subsidy schemes, and Ofgem did nothing to tackle it.
Fyfe worked as a manager for 5 years until 2017 for Ofgem E-Serve, which approves and regulates green energy subsidies. As a manager in compliance and counter-fraud, the Domestic Renewable Heat Incentive (Domestic RHI Scheme) caught his attention.
The scheme was set up to encourage people to use more environmentally-friendly alternatives to fossil fuel in domestic settings, yet Fyfe alleges that “industrialised” level subsidy claims were made.
He was particularly concerned about the Domestic Renewable Heat Incentive, which is intended to encourage householders to use greener alternatives to fossil fuels.
He claims firms induced householders to sign contracts giving away the incentive payments for the scheme in exchange for “free” biomass boilers. The companies would ask homeowners to sign leases on their property, for supplying these boilers, but would benefit by receiving the subsidy money.
Fyfe said: “they were getting paid many millions and millions of pounds, the return on investment was absolutely huge, but they bled the scheme dry.”
These contentious business models began appearing between 2014 and 2017, according to the whistleblower.
He claims that at this time, the so-called “third-party models” were declared disallowed by the Ofgem legal team.
However, he said: “There was a huge drive to get as many applications through as possible. There simply were not checks getting done. They were processed willy-nilly.”
Fyfe further added that the poor level of control were driven by pressures within Ofgem senior management as there was perceived to be “a risk of the management of those schemes being taken away from Ofgem and contracted out to a private company.”
Ofgem told the BBC: “We have a system of processes and checks in place to support our staff to make robust assessments and decisions on applications.”
Yet Fyfe expressed concern about the use of external auditors in these systems.
He claims that whilst auditors were sent to inspect green energy instalments, they would often “push back” against visiting more awkward locations such as Orkney, Shetland, the Western Isles.
He says that Ofgem took “quite a sympathetic approach” to excuses and so audits were delayed, or even “kicked into the long grass.”
Fyfe claims that between 50 and 60 percent of cases he reviewed, in which subsidies had been approved, did not comply with Ofgem guidelines. He contacted the National Audit Office but following an independent investigation by Ofgem he claims no action was taken.
The Public Accounts Committee have previously investigated the Domestic RHI scheme, deeming the rates of fraud “too high”.
Deputy chairman of the Public Accounts Committee, Sir Geoffrey Clifton-Brown, told File on 4: “If the information from your whistleblower is correct, this amounts to a public scandal and I will be referring it formally to the National Audit Office for them to investigate.”