Infrastructure heavyweight calls for transparency about future nuclear plants

National Infrastructure Commission chairman Sir John Armitt has urged the government to be transparent with UK consumers about the upfront costs of paying for future nuclear plants.

In light of rising costs at Hinkley Point C, Armitt has told the government it needs to explain what the cost of government-backed schemes will mean for taxpayers.

In an interview with the Financial Times, Armitt said: “It is clear that no developer is prepared to build a new major nuclear plant without government support […] Using the RAB model will get these schemes going, but the decision to put the cost on energy bills, not taxation, will mean consumers pay up front.”

In 2019, the government announced that it was looking into the Regulated Asset Base (RAB) model for future nuclear projects, such as Sizewell C and eight others. It is also expected to be used in funding small, modular reactors. The new model was introduced to reduce dependence on private finance by getting consumers to partially fund these projects through a surcharge on energy bills.

The model was hailed as a way to bring down whole-life build costs. The UK government said that each new power station built by RAB would cost “at most a few pounds a year” for the typical household during the early stages of construction. This cost is expected to peak at £1 per month, or £12 a year, in the main construction phase.

Armitt warned that the public needed to be kept in the loop that future nuclear plants would take a long time to complete and that this would “inevitably add cost to bills in the nearer term once construction begins”.

Last week, EDF, which is delivering Hinkley Point C in Somerset, said the project would be delayed by yet another year, with costs rising by £3bn since the last price hike in 2019. This takes the whole project to £25bn-£26bn, which is £8bn above what was first budgeted and eight years behind schedule. Although Hinkley Point C is being financed by a privately-funded model, it demonstrates the delays and cost rises in the industry.

Armitt added that the need for transparency was especially important in a climate where energy prices have been rocketing.

“Given the choice it has made, it will be vital that government is transparent about how much consumers are being asked to pay for new nuclear, especially if that begins to bite before energy prices drop,” he said.

The RAB model has been previously used to fund the construction of the Thames Tideway Super Sewer and Heathrow Terminal 5. Consumers are currently paying £17 a year for the Tideway project, which is expected to rise to £25.

Leave a comment