RAB stands for Regulated Asset Base – a funding model the UK government has introduced to support large infrastructure projects, including new nuclear power plants and other energy investments.
Here’s how it works and how it affects energy costs:
What is the RAB model?
- Traditionally, big projects like nuclear plants are funded by private investors, who only start making returns once the plant begins producing electricity. This makes them very expensive and risky, pushing up the cost of financing.
- Under the RAB model, energy companies are allowed to start charging consumers through their energy bills while the project is still being built.
- The idea is that spreading the costs and risks between investors, government, and bill-payers lowers financing costs overall.
Impact on UK energy costs
Short term (during construction):
- Bills will likely rise slightly because energy users will start paying a small surcharge years before the project is finished.
- For example, with Sizewell C (the proposed nuclear plant in Suffolk), households could start contributing a few pounds a year on their bills well before it generates electricity.
Long term (once operational):
- The hope is that by lowering the financing risk, the overall cost of building nuclear plants (or other large low-carbon projects) will be cheaper than under the old system.
- This could lead to lower electricity prices in the long run, compared to alternatives like government borrowing or fully private financing.
- Nuclear power is also a low-carbon, reliable source, so it can help stabilise costs against volatile gas markets.
Criticisms and risks
- Consumers bear the risk: If projects run over budget or are delayed (as nuclear often is), bill-payers could be locked into paying more.
- Regressive impact: The costs are spread across all households, regardless of income, so it can hit lower-income families harder.
- Uncertain savings: While it reduces financing costs, whether this translates into significantly cheaper bills depends on construction efficiency and government oversight.
Current & Forecast RAB Charges
- The RAB model charges via a pence per-kWh charge model
- Early pilot forecasts were very low (~0.05p/kWh), but once implementation began, the actual confirmed rate rose to around 346 pence/kWh.
- The levy will appear as a line item on your electricity bill and could change each quarter.
- Cost of RAB scales in line with electricity usage
Who pays the RAB levy?
- The levy is collected from all licensed electricity suppliers.
- Suppliers then pass this cost directly to their customers (both businesses and households), usually as a non-commodity charge on bills.
- This means every electricity consumer in the UK contributes, regardless of whether they are domestic or commercial.
Business vs Domestic impact
- Domestic households will see a small addition (for example, about £12/year for a typical household in late 2025).
- Businesses will also pay, but the cost scales with their electricity use.
- For example, a medium business using 100,000 kWh/year could see ~£346/year in added RAB charges at the confirmed Nov–Dec 2025 rate (~0.346 pence/kWh).
- Large energy users (factories, data centres) will feel the impact much more strongly, though still relatively small compared to wholesale energy costs.
Why it applies to everyone
The government designed RAB this way to:
- Spread the cost widely across all electricity users, reducing the burden on any single group.
- Ensure a stable and predictable revenue stream to finance projects like Sizewell C.
- Avoid the need for 100% government borrowing or risky private financing.
RAB makes big projects easier and cheaper to finance, but UK households and businesses will see a small upfront rise in energy bills before they see the long term benefit from potentially more stable and lower long-term electricity prices. RAB is a universal levy – it applies to both business and domestic bills, with businesses generally paying more because of higher consumption.
If you have any questions in regards to Regulated Asset Base (RAB), please feel free to contact us on the following –
01738 474 360
