A new charge is being introduced for funding nuclear projects and will have an impact on consumer bills.
What is a Regulated Asset Base (RAB)?
The RAB is a model of financing public projects with private finance through a levy that allows investors to receive a guaranteed return on their investment during the lifetime of an asset. It is most used in large projects that cover key infrastructure projects in industries such as water, gas and electricity networks.
The purpose of the model is to try facilitating shared risk between investors, consumers and the government with the overall target of reducing costs of an infrastructure project. Although the RAB model lowers the cost of financing the projects, it does mean that consumers contribute to the funding through charges in their bills. However, the long-term savings made through the infrastructure are said to off-set the small increases in bills.
Role in Nuclear Projects
In 2022, the government passed the Nuclear Energy Financing Act which established RAB as the model for funding future nuclear projects, such as Sizewell C. Passing the act meant that all suppliers will be required to fund nuclear projects through the Supplier Obligation Mechanism, which is also in operation for the Contracts for Difference (CfD) scheme. However, in the CfD model participants are already generating electricity, whereas RAB costs are going to be passed onto consumers from suppliers during the construction phase.
With the government announcing last month that the construction of Sizewell C will go ahead at a cost of £38bn, the Nuclear RAB will begin to appear in bills soon. The Low Carbon Contracts Company (LCCC) has been given the role of revenue collection counterparty, channelling funds between suppliers and nuclear companies.
Increased nuclear infrastructure has been underscored by the government as a key way to help the UK obtain its target of ensuring 95% of electricity comes from low-carbon sources by 2030.
How will this impact bills?
The announced construction of Sizewell C means that the RAB is soon coming into force with the LCCC confirming the first set of rates. The scheme is set for implementation at the start of November with the following rates announced for the period 1st October 2025-31st December 2025:
- £0.00p/kWh 1st October-31st October (before scheme implementation)
- £0.345p/kWh 1st November-31st December
The levy will therefore begin to be passed onto consumers from 1st November, and all future quarterly rates will be published on the settlement data for suppliers webpage by the LCCC, with a ‘settlement calendar’ being provided for suppliers with the schedule for RAB payments and the rates. The rates published will then be those passed onto consumers in their bills.
For future updates on the charge, make sure to follow LGE’s social media with news being updated regularly!