‘A catastrophically poor bargain for the UK’: Experts verdict on government plan for new nuclear finance

 NFLA 14th Oct 2024

As Prime Minister Sir Kier Starmer meets world finance leaders today at the UK International Investment Summit, the Chair of the Nuclear Free Local Authorities has co-signed a letter sent to the Energy Secretary and government departments challenging plans to use the Regulated Asset Base model to finance future nuclear power plants.

The letter, drafted by the former Chief Statistician of the Scottish Office, has been endorsed by thirty high-level experts, comprising senior academics, former civil servants, nuclear regulators, citizen scientists and NGOs. It has been sent to Energy Secretary, Ed Miliband, and several Whitehall departments – the Energy Security and Net Zero Committee, the National Audit Office, the Public Accounts Committee, and the Comptroller and Auditor General.

14th October 2024

‘A catastrophically poor bargain for the UK’: Experts verdict on government plan for new nuclear finance

As Prime Minister Sir Kier Starmer meets world finance leaders today at the UK International Investment Summit, the Chair of the Nuclear Free Local Authorities has co-signed a letter sent to the Energy Secretary and government departments challenging plans to use the Regulated Asset Base model to finance future nuclear power plants.

The letter, drafted by the former Chief Statistician of the Scottish Office, has been endorsed by thirty high-level experts, comprising senior academics, former civil servants, nuclear regulators, citizen scientists and NGOs. It has been sent to Energy Secretary, Ed Miliband, and several Whitehall departments – the Energy Security and Net Zero Committee, the National Audit Office, the Public Accounts Committee, and the Comptroller and Auditor General.

Due to the inevitable huge costs and construction delays, the private sector is loath to finance new nuclear power projects; Sizewell C is struggling to find financial backers. Consequently, new plants can only be built with a significant public subsidy.

The latest subsidy mechanism to be adopted by the UK Government is the Regulated Asset Base model, in which an additional nuclear levy will be imposed on hard-pressed electricity consumers to make interim payments to developers of new nuclear projects to periodically offset their construction costs; this lifts the burden of rising costs and costly delays from the shoulders of developers and places this upon those of the customer. In so doing, not only is the project derisked for the developer, but the latter has less incentive to arrest costs or prevent delays because they know electricity consumers will have to meet them.

The experts have labelled RAB ‘a catastrophically poor bargain for the UK’.

The NFLAs have labelled RAB ‘ROB’, calling it daylight robbery and especially iniquitous when imposed upon the poorest and oldest customers. Many households are already struggling to pay huge, and rising, energy bills, and will be further burdened by a nuclear levy, and as new nuclear plants take so long to build many older customers are unlikely to be around to access any electricity from them.

In a response to a 2022 government consultation by the Business Department,[1] we denounced the proposal to impose a RAB levy on these groups, who are most vulnerable to cold and fuel poverty, and called for them to be exempted from the levy or promptly recompensed by the government if they are required to pay it.

14th October 2024

‘A catastrophically poor bargain for the UK’: Experts verdict on government plan for new nuclear finance

As Prime Minister Sir Kier Starmer meets world finance leaders today at the UK International Investment Summit, the Chair of the Nuclear Free Local Authorities has co-signed a letter sent to the Energy Secretary and government departments challenging plans to use the Regulated Asset Base model to finance future nuclear power plants.

The letter, drafted by the former Chief Statistician of the Scottish Office, has been endorsed by thirty high-level experts, comprising senior academics, former civil servants, nuclear regulators, citizen scientists and NGOs. It has been sent to Energy Secretary, Ed Miliband, and several Whitehall departments – the Energy Security and Net Zero Committee, the National Audit Office, the Public Accounts Committee, and the Comptroller and Auditor General.

Due to the inevitable huge costs and construction delays, the private sector is loath to finance new nuclear power projects; Sizewell C is struggling to find financial backers. Consequently, new plants can only be built with a significant public subsidy.

The latest subsidy mechanism to be adopted by the UK Government is the Regulated Asset Base model, in which an additional nuclear levy will be imposed on hard-pressed electricity consumers to make interim payments to developers of new nuclear projects to periodically offset their construction costs; this lifts the burden of rising costs and costly delays from the shoulders of developers and places this upon those of the customer. In so doing, not only is the project derisked for the developer, but the latter has less incentive to arrest costs or prevent delays because they know electricity consumers will have to meet them.

The experts have labelled RAB ‘a catastrophically poor bargain for the UK’.

The NFLAs have labelled RAB ‘ROB’, calling it daylight robbery and especially iniquitous when imposed upon the poorest and oldest customers. Many households are already struggling to pay huge, and rising, energy bills, and will be further burdened by a nuclear levy, and as new nuclear plants take so long to build many older customers are unlikely to be around to access any electricity from them.

In a response to a 2022 government consultation by the Business Department,[1] we denounced the proposal to impose a RAB levy on these groups, who are most vulnerable to cold and fuel poverty, and called for them to be exempted from the levy or promptly recompensed by the government if they are required to pay it.

Letter………………………………………………………………………………………………………. https://www.nuclearpolicy.info/news/a-catastrophically-poor-bargain-for-the-uk-experts-verdict-on-government-plan-for-new-nuclear-finance/

October 18, 2024 - Posted by Christina Macpherson | business and costs, UK