The Nuclear Energy (Financing) Bill is a government bill which completed all its stages in the House of Commons on 10 January 2022. It would introduce the regulated asset base (RAB) as a way of financing new nuclear power stations. Under a RAB, an economic regulator is given the power to levy a charge on consumers, the proceeds of which go towards financing the new infrastructure. At the time of writing, a date for second reading in the House of Lords has not been set.
Nuclear Energy (Financing) Bill (283KB PDF)
The Nuclear Energy (Financing) Bill is a government bill which completed all its stages in the House of Commons on 10 January 2022. It had its first reading in the House of Lords on 11 January 2022. At the time of writing, a date for its second reading in the House of Lords has not been set.
The Nuclear Energy (Financing) Bill would create the legal structure for a new model for financing new nuclear power stations, known as the regulated asset base (RAB). The RAB has been used in the UK to finance water, gas and electricity infrastructure, but has not before been used to finance nuclear power. The RAB model aims to bring down the cost of financing by sharing the investment risk with consumers. Under a RAB, an economic regulator is given the power to levy a charge on consumers, the proceeds of which go towards financing the new infrastructure. For new nuclear plants, electricity suppliers would be required to pay a certain amount and would be expected to pass this charge on to their customers.
The bill would give the secretary of state powers to modify a nuclear company’s electricity generation licence to provide for a RAB. The Government would also appoint a revenue collection counterparty to collect payments from electricity suppliers and pass these to the nuclear company. Once construction was ready to begin, the nuclear company would enter into a contract with the revenue collection company. Were a nuclear company to become insolvent, a special administrator would be appointed with the goal of ensuring that the nuclear plant began or continued to produce electricity.
The Government has estimated that using a RAB for new nuclear power will save consumers over £30bn compared to using a contracts for difference model, as has been used to fund the most recently constructed nuclear plants.
The Labour party supports the Government’s aims to ensure new nuclear plants are built. It also supports the introduction of the RAB model. It has argued, however, that the model presents risks for consumers. During the bill’s passage through the House of Commons, the Labour party introduced amendments which aimed to protect consumers from cost overruns. These were defeated on division. The Labour party also argued that Chinese state companies should not be involved in the UK’s civil nuclear infrastructure, and put forward amendments prohibiting foreign-controlled companies from participating in a RAB. These amendments were also defeated on division.
The Scottish National Party and the Liberal Democrats argued against the building of new nuclear power stations. They both said that the money would be better spent on renewables and energy efficiency.
Nuclear Energy (Financing) Bill (283KB PDF)
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