Nuclear RAB Levy Briefing: Costs, Charges and Exemptions
Nuclear energy is set to play a critical role in the UK’s net zero strategy, but funding new plants is costly and complex. The government’s Nuclear Regulated Asset Base (RAB) model aims to solve this, passing some costs onto end users via energy bills.
What is the Nuclear RAB Levy?
The Nuclear Regulated Asset Base (RAB) levy is a new charge that will appear on UK electricity bills from November 2025. It is designed to help fund the construction of new nuclear power stations, beginning with Sizewell C in Suffolk.
Under the RAB model, energy suppliers contribute towards project costs and recover these through a levy applied to customers. This reduces long-term financing costs but introduces a regulated charge in the short term.
The scheme is regulated by Ofgem and administered by the Low Carbon Contracts Company (LCCC).
Why is the Nuclear RAB Levy being introduced?
The Nuclear RAB levy has been introduced to tackle one of the biggest challenges facing new nuclear projects: financing. Building a nuclear power station, such as Sizewell C, requires tens of billions in upfront investment. Construction can take a decade or more, and the risk of delays or cost overruns is significant. Historically, these factors have discouraged private investors.
The RAB model changes this. It allows a portion of project costs to be recovered from consumers during construction. This provides developers with a stable revenue stream and lowers borrowing costs, making investment more viable. In effect, it spreads risk, improves project bankability, and supports the delivery of critical low-carbon energy infrastructure over the long term.
How is the Nuclear RAB Levy charged?
All suppliers are expected to pay the levy, contribute based on their market share, and pass the cost on to consumers as a non-commodity, pass through charge. It will be displayed as a new billing line item on your invoice.
The levy will comprise of three elements;
· Interim Levy Rate (ILR): The primary charge, designed to cover construction payments for Sizewell C. This rate is reviewed and set on a quarterly basis.
· Operational Costs Levy (OCL) Rate: A smaller, annual £/MWh charge to cover the administration and running costs of the scheme.
· Reserve Payments: Contributions to the Total Reserve Amount (TRA), a contingency fund that protects the scheme in the event of supplier defaults.
Who is exempt from the Nuclear RAB Levy?
Certain businesses may be exempt from the Nuclear RAB levy under the Energy Intensive Industries (EII) scheme. Eligibility is generally based on sector classification and energy intensity, but the criteria can be complex, requiring careful assessment and accurate documentation for compliance.
Big Energy Group provides support in reviewing exemption eligibility, preparing applications, and ensuring billing reflects any relief. If you have any questions about Nuclear RAB charges or your EII exemption eligibility, you can contact our team here.
What happens next?
The RAB levy will appear on electricity bills from 1 November 2025, with quarterly updates starting 1 January 2026. The LCCC will publish new rates 30 days before each quarter, adjusting tariffs, if necessary, based on the latest forecasts.
The LCCC currently forecasts that the Interim Levy Rate will stay between £3.50 and £4.50 per MWh over the next 18 months. These rates cover the anticipated costs of building Sizewell C, although the RAB Levy could rise further depending on what costs are actually incurred to complete construction.
Suppliers will bill customers based on these forecasts, then issue reconciliation invoices when actual costs are confirmed. If defaults by suppliers result in a deficit above Ofgem’s set threshold, mutualisation will be triggered to cover the shortfall.
Final Thoughts
The introduction of the Nuclear RAB Levy highlights the importance of proactive and strategic energy management. Detailed portfolio reviews, refined procurement strategies, robust invoice validation, and ongoing demand reduction all play a vital role in controlling costs and building resilience against rising non-commodity charges.
Looking ahead, careful monitoring of government policy and updates from the LCCC will be essential. Big Energy Group supports organisations in navigating these changes, helping businesses prepare effectively and adapt their strategies with confidence.
About Big Energy Group
Big Energy Group is a privately held, British-owned energy brokerage with an established track record of helping clients successfully navigate the energy market. The company has offices in Harrogate and the Tees Valley and serves more than 500 businesses across the UK. For more information, please visit bigenergygroup.co.uk.
