Nuclear Regulated Asset Base Levy

Nuclear Regulated Asset Base (RAB) Levy Explained: What It Means for UK Business Electricity Bills

From 1 November 2025, UK electricity suppliers began paying the new Nuclear Regulated Asset Base (RAB) Levy, with many businesses now seeing the cost reflected in their electricity bills. The levy has been introduced to help fund the construction of new nuclear power stations, including Sizewell C, as part of the UK's long-term strategy to strengthen energy security and achieve net zero.

For businesses, the Nuclear RAB Levy represents another non-commodity electricity cost that could increase overall energy bills, even though the new generation capacity will not begin producing electricity for several years.

What is the Nuclear Regulated Asset Base (RAB) Levy?

The Nuclear Regulated Asset Base (RAB) Levy is a government-backed funding mechanism that allows developers of new nuclear power stations to recover part of their investment during construction rather than waiting until the plant begins generating electricity.

The approach is designed to reduce financing costs by providing investors with a predictable return throughout the construction period. Lower financing costs are expected to reduce the overall lifetime cost of new nuclear projects compared with traditional funding models.

The levy was introduced following the Nuclear Energy (Financing) Act 2022, which enabled the RAB model to be used for new UK nuclear projects.

Why has the UK introduced the Nuclear RAB model?

Large nuclear power stations require significant upfront investment and can take more than a decade to build.

Under previous funding arrangements, investors carried much of the construction risk, leading to higher borrowing costs. The Regulated Asset Base (RAB) model shares some of that risk between developers, investors, government and electricity consumers.

The government's objectives include:

• Supporting investment in new nuclear infrastructure.
• Improving the UK's long-term energy security.
• Reducing reliance on imported energy.
• Helping deliver the UK's clean power and net zero ambitions.
• Lowering the overall financing cost of future nuclear generation.

While these long-term benefits may help stabilise electricity prices in the future, businesses begin contributing through the levy well before new power stations start producing electricity.

How will the Nuclear RAB Levy appear on electricity bills?

Electricity suppliers are required to contribute to the Nuclear RAB funding scheme and, in most cases, will pass these costs on to customers through their electricity bills.

The scheme is administered by the Low Carbon Contracts Company (LCCC) and regulated by Ofgem.

The levy consists of two components:

Interim Levy Rate (ILR)

The primary charge is the Interim Levy Rate (ILR), which was introduced at £3.455 per MWh, the equivalent to 0.3455p per kWh

Operational Costs Levy

A much smaller charge covers the administration of the scheme at £0.0028 per MWh.

The levy is reviewed periodically, meaning future rates may change. Suppliers generally invoice customers using forecast levy rates before later reconciliation adjustments are applied.

If a supplier defaults on its payment obligations, the outstanding costs can be redistributed across other suppliers, who may subsequently recover those costs from customers.

Which businesses must pay the Nuclear RAB Levy?

The vast majority of UK businesses supplied with electricity will contribute indirectly through their electricity supplier.

However, businesses that qualify under the Energy Intensive Industries (EII) Scheme may be exempt from the Nuclear RAB Levy, provided they hold a valid exemption certificate.

Eligible organisations are typically found in sectors such as:

• Steel manufacturing
• Chemicals
• Paper production
• Glass manufacturing
• Other energy-intensive industrial processes

Businesses that do not qualify for the EII exemption should expect the levy to be incorporated alongside existing non-commodity electricity charges.

Will businesses with fixed electricity contracts be affected?

Many organisations assume a fixed-price electricity contract protects them from new government charges.

However, this is not always the case.

Most commercial electricity contracts include provisions allowing suppliers to pass through new or amended regulatory charges introduced during the contract term.

Some suppliers may choose to absorb the Nuclear RAB Levy until a contract expires, while others will recover the cost immediately in accordance with their contract terms.

Businesses should review their supply agreements to understand how changes in government policy may affect future electricity costs.

What does the Nuclear RAB Levy mean for UK businesses?

For most organisations, the Nuclear RAB Levy represents another addition to the growing number of non-commodity costs included within commercial electricity bills.

Although the immediate financial impact is relatively modest, it contributes to the increasing complexity of business energy pricing and reinforces the importance of understanding every element of an electricity bill.

Over the longer term, successful delivery of new nuclear generation could help improve UK energy security, diversify electricity supply and reduce exposure to volatile wholesale energy markets. However, those potential benefits will only be realised once new nuclear stations become operational.

How can businesses manage rising non-commodity electricity costs?

While businesses cannot avoid the Nuclear RAB Levy (unless exempt under the Energy Intensive Industries Scheme), they can reduce the overall impact of rising energy costs by:

• Regularly reviewing electricity procurement strategies.
• Improving energy efficiency across buildings and operations.
• Investing in energy-saving technologies.
• Monitoring non-commodity charges as part of energy budgeting.
• Seeking independent energy advice before renewing electricity contracts.

Understanding how policy costs such as the Nuclear RAB Levy affect your bills allows businesses to make more informed procurement and energy management decisions.

Need help understanding your business energy costs?

Commercial electricity bills are becoming increasingly complex, with policy costs, network charges and environmental levies making up a growing proportion of the total price.

At SeeMore Energy, we help businesses understand every component of their energy bill, identify opportunities to reduce consumption and develop procurement strategies that minimise long-term energy costs.

If you'd like to understand how the Nuclear Regulated Asset Base (RAB) Levy could affect your organisation, get in touch with our expert team for impartial advice and support.