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Nuclear RAB Levy

What is the Nuclear RAB Levy?

UK electricity bills carry small but rising charges that nobody can see, switch away from, or directly negotiate. One of the newer ones is the Nuclear RAB Levy. RAB stands for Regulated Asset Base, the same regulated-utility model that funds water and gas distribution networks. Applied to new nuclear, the model lets developers like Sizewell C charge consumers during construction in exchange for accepting regulated return rates, instead of waiting until generation begins. The result is a cheaper financing cost for the developer and a lower total system cost than Hinkley Point C’s Contracts for Difference model. The trade-off is that consumers carry construction risk and start paying years before any electricity flows.

The RAB sits inside the wider mix of pass-through costs you’ll see on every business electricity bill from 2026 onward.

The Nuclear RAB framework was legislated in the Nuclear Energy (Financing) Act 2022 and started being applied to specific UK nuclear projects (Sizewell C in particular) from 2024. For UK business electricity customers, the Nuclear RAB Levy is one of several policy-driven costs that show up in the unit rate. Understanding it helps make sense of why electricity bills carry small but growing charges that nobody can switch away from.

What the Nuclear RAB Levy is

The Nuclear RAB Levy is a charge added to UK electricity consumers’ bills to fund new nuclear power generation.

• Authorised under the Nuclear Energy (Financing) Act 2022.
• Applied to specific nuclear projects under Ofgem licence conditions.
• Collected by suppliers and passed through to the nuclear project owners via central settlement.
• Recovered through the unit rate on UK electricity bills (typically not shown as a separate line for small business customers).

The levy starts small during early construction and grows as more nuclear capacity comes online under the model.

How the RAB model works

The Regulated Asset Base (RAB) model is well-established in UK utility regulation, used by water companies, gas distribution networks, and electricity transmission and distribution operators. Under RAB.

1. The asset owner (in this case the nuclear project developer) builds a regulated asset.
2. The regulator (Ofgem for nuclear) approves the costs as efficient.
3. The asset owner is allowed to recover those costs plus a regulated return on capital from consumers.
4. Recovery starts during construction, not at the end.
5. The regulator sets a fixed return rate that gives the asset owner predictable revenue.

The key difference for nuclear is that construction takes 8-12 years. Letting the developer charge consumers during build reduces the cost of capital substantially. See the live Nuclear RAB Levy article for the deeper guide.

Why RAB was introduced for nuclear

The previous funding model for UK nuclear (used for Hinkley Point C) was the Contract for Difference (CfD).

• CfD guarantees the developer a fixed price (strike price) for the electricity it generates once operational.
• The developer takes all the construction cost risk and recovers it through the strike price.
• The result for Hinkley Point C was a strike price of around £92 per MWh in 2012 money, very high relative to other generation.

RAB shifts construction cost recovery to consumers during build, lowering the cost of capital for the developer and the strike price (or equivalent) for the generated electricity. The total UK system cost is expected to be lower.

Projects funded under Nuclear RAB

Sizewell C is the first project to use Nuclear RAB. The model is expected to be the default for future UK large-scale nuclear builds.

Cost impact on UK bills

The Nuclear RAB Levy starts small and grows over time.

• Early phase (2024-2030). Levy estimated at around 1 to 2 per cent of the UK electricity unit rate, typically less than 0.5 p/kWh.
• Construction peak (2030-2035). Levy expected to grow to 3 to 5 per cent of the unit rate as more capacity is being built.
• Generation phase (2035 onwards). Levy reduces as the project starts generating revenue from selling electricity at wholesale prices.

For a typical UK SME using 50,000 kWh per year, the early-phase levy adds around £100-£250 per year to electricity costs. Larger industrial users see proportionally larger amounts.

Who pays the Nuclear RAB Levy

All UK electricity consumers pay the Nuclear RAB Levy through their supplier.

• Domestic and non-domestic customers alike.
• No opt-out is available; the levy is a regulatory pass-through.
• Energy-intensive industries (EII) qualifying under the EII Scheme can recover some pass-through policy costs (RO, CfD, Capacity Market) but Nuclear RAB Levy treatment is still being defined.
• UK domestic price cap includes the levy automatically; business contracts pass it through in the unit rate.

Common criticism of the model

The Nuclear RAB Levy has faced three main criticisms.

• Consumers carry construction risk. Under RAB, consumers fund construction even if the project is delayed or cancelled. Previous nuclear projects (in the UK and abroad) have run materially over budget.
• Low transparency. The exact levy is opaque to most customers because it is bundled into the unit rate.
• Long-term commitment. Customers paying today are funding generation that will not come online for 10+ years, with the asset operating for 60+ years.

Defenders point out that the model lowers total system cost compared to CfD, secures low-carbon baseload generation, and de-risks the developer enough to attract investment that would not otherwise be available.

Nuclear RAB vs CfD funding

The future of Nuclear RAB

UK government plans suggest Nuclear RAB will fund.

• Sizewell C (under construction).
• Future large-scale projects (Wylfa, Bradwell, others still in planning).
• Possibly Small Modular Reactors (SMRs), though details are evolving.

The UK government targets 24 GW of nuclear generation capacity by 2050, up from the current ~6 GW. Achieving that target depends substantially on the Nuclear RAB model working as intended.

Practical implications for businesses

For UK business electricity customers, the Nuclear RAB Levy is a small but growing component of the bill that nobody can switch away from. Two practical implications.

• Bill forecasting. The levy will grow modestly over the next decade. Business energy budgets should factor in a 2-4 per cent annual increase in non-commodity costs partly attributable to RAB and other policy charges.
• Sustainability framing. Nuclear is treated as low-carbon for SECR and Scope 2 reporting purposes. The levy contributes to building the UK’s low-carbon baseload capacity, which feeds into the location-based Scope 2 emission factor over time.

Related entries. CCL, Contracts for Difference, Renewables Obligation, Capacity Market, EII Scheme, SECR, Scope 2 emissions.

Cost comparison vs alternative funding models

Illustrative figures for how the Nuclear RAB Levy stacks up against alternative ways of funding new nuclear in the UK.

Example only. Real comparative figures depend on each project’s scope, financing terms, and inflation assumptions. The point is the principle that earlier cost recovery substantially reduces the cost of capital and the strike price equivalent.

Common customer questions and answers

Recurring questions from UK business customers about the Nuclear RAB Levy.

• Is it shown separately on my bill? Usually no for small business customers; bundled into the unit rate. Larger industrial customers on pass-through contracts may see it itemised.
• How fast is it growing? Currently around 1-2 per cent of the unit rate, projected to grow to 3-5 per cent at construction peak then reduce as projects start generating.
• Will I ever get the money back? No, in the sense that the levy is a recovery of construction costs, not an investment. The benefit comes through lower long-term electricity costs once the nuclear capacity is generating.
• Can I object to paying? No. The levy is a regulatory pass-through. There is no opt-out mechanism for UK electricity customers.

Frequently asked questions