Nuclear RAB: Another Aspect of Johnson’s Toxic Legacy

Overview —

Boris Johnson initiated a new push for nuclear power. The funding model used to pay for them takes on many of the worst aspects of PFI schemes – inflated costs and high risk of failure – and will result in Scottish energy consumers paying higher energy bills despite none of the nuclear plants being built in Scotland.


Jim Cuthbert

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This paper was produced jointly with Jubilee Scotland, who campaign to reduce or eliminate the burden of unjust debts in Scotland and in the developing world.

Yet another aspect of former prime minister Boris Johnson’s legacy was his decision to try to solve the UK’s medium term energy needs by going for a programme of eight new nuclear power stations. It’s not just that this decision is questionable in itself – nuclear power is inherently riskier and is now much more expensive than many sources of renewable power. In addition, the Regulatory Asset Base, (RAB), funding model that Johnson decided on to pay for the new plants is particularly inappropriate for the nuclear industry and makes it nearly inevitable that excessive windfall profits will accrue to the original equity investors. This paper explains why and suggests some things that should be done about it.


― The Scottish Government is committed to maintaining the ban on new nuclear power plants in Scotland. However, the UK Government has recently decided to expand its programme of new plants.

― The construction of up to eight proposed new power stations will be funded by using a “Regulatory Asset Base” funding model.

― This model is similar to PFI and other Public Private Partnership schemes though it will be paid via energy bills rather than taxes.

― RAB has been widely used in the UK to fund capital expenditure in privatised utility companies. It has, however, proved a problematic approach, often resulting in high charges for consumers, and excess profits for the equity owners: witness the privatised water companies in England.

― It will be particularly difficult to apply RAB successfully in nuclear projects, because of the long construction periods, and the long operational lives of the assets once completed. The paper illustrates the scale of the windfall profits which could well result for the equity owners in nuclear RAB projects.

― The Whitehall department responsible for implementing nuclear RAB is the Department for Business, Energy and Industrial Strategy, (BEIS). BEIS’s proposed solutions for countering the difficulties involved with nuclear RAB are inadequate.

― The paper suggests safeguards which should be put in place before new nuclear RAB contracts are signed. In particular, there should be limits on the extent to which projects can be loaded with debt: and there should be arrangements to ensure any windfall profits arising under RAB can be fairly shared with consumers.

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