Nuclear RAB Levy to Impact Commercial Electricity Bills in U.K.
A new funding mechanism is poised to add a fresh cost component to commercial electricity supplies across the U.K. — the Regulated Asset Base (RAB) model for new nuclear generation, being introduced under the Nuclear Energy (Financing) Act 2022 and upcoming regulations.
Here’s a breakdown of what businesses need to know.
What is the Nuclear RAB Levy?
Under the RAB model, future nuclear power plants will begin recovering construction funding from electricity consumers while the plant is still being built, rather than waiting until it enters operation.
In practical terms, this means all electricity suppliers will pay into a levy (known as the Nuclear RAB Levy) which they will pass on to their customers—including commercial users.
According to recent published rates:
-
From 1 November 2025, the “Supplier Obligation Levy” will be approximately £3.455 per MWh supplied.
-
An “Operational Levy” at around £0.0028 per MWh will also apply from 1 October 2025.
How it affects commercial electricity customers
-
For businesses, especially those whose contracts pass through non-commodity costs (levies, network charges, etc.), the Nuclear RAB Levy will show up as an increased “unit cost” on electricity bills. Some key implications:
-
Businesses with pass‐through or partially fixed contracts will likely see the cost being passed on.
-
Energy Intensive Industries (EIIs) may be eligible for discounts or exemptions under the scheme, which reduces their exposure.
-
The levy is in addition to other non-commodity cost increases (such as network charges) that are already forecast to rise.
In short: for many businesses, this represents another upward pressure on energy costs—albeit a relatively modest one compared with commodity price spikes.
Practical tips for businesses
-
Check whether your contract passes through non‐commodity costs (levies and grid/network charges) rather than being fully fixed, as your exposure will differ.
-
If you’re not classified as an EII, assess the potential impact of ~£3.45/MWh (0.345p/kWh) additional cost from November 2025.
-
Engage with your energy supplier or broker now: they should provide clarity on how this levy will be incorporated.
-
Consider demand‐side strategies or efficiency improvements to mitigate the impact of rising fixed costs.
-
For future contracts, ask about how these structural cost changes (levies, network cost increases) have been factored in.
The bigger picture: cost vs benefit
While the levy adds cost for businesses, proponents argue the long-term benefits include: improved energy security, more predictable “baseload” low-carbon generation, and in time, savings compared with higher-risk financing methods.
However, critics caution that the exact burden on consumers/businesses and the timing of benefits remain uncertain. For businesses already facing tight margins on power costs, even incremental cost increases may be significant.Conclusion
The introduction of the Nuclear RAB Levy marks a systemic shift in how the U.K. finances new nuclear power plants—and that change will ripple through to commercial electricity customers. While the levy itself is modest per unit of energy, for large energy‐consuming businesses it could meaningfully increase annual spend.
As with all evolving regulatory levies and non-commodity energy costs, businesses are wise to stay informed, review contracts, and build cost-mitigation strategies now.
-
