LCCC bumps back nuclear RAB levy collection until 1 December

The delay to revenue recovery means that the first charging year will have one month fewer – and that the ILR must increase to account for the shorter collection period. The LCCC notes that it’s likely Ofgem and the Department for Energy Security and Net Zero (DESNZ) will need to update allowed revenues. Therefore, further change could be on the horizon.

In the graph below, we compare the initial and updated forecasts for nuclear RAB. From Q1 2026 and beyond, the forecast has uplifted by between £0.22/MWh and £0.30/MWh.

Note: The initial forecast Q4 2025 ILR applied from 1 November; the updated Q4 2025 ILR applies from 1 December.

Source: LCCC

Suppliers will recover the levy from all consumers except Energy Intensive Industries (EIIs), which will be exempt.

Background to the RAB scheme

The nuclear RAB scheme is a funding model to finance the construction and operation of the Sizewell C nuclear power station, and potentially more nuclear assets in the future. The RAB model allows developers to recover their efficiently incurred costs and earn a specified allowed return (cost of capital) on the capital they invest. This makes it easier and cheaper for those developers to raise finance and fund the investment of large capital projects.

The UK Government confirmed it will take an initial stake of 44.9% in Sizewell C, alongside private firms such as La Caisse and Amber Infrastructure.

Ofgem will regulate the scheme and LCCC will collect revenues from energy suppliers to pay for it.

Sizewell C

The Government expects the construction of Sizewell C nuclear power station (built alongside Sizewell A and B on the Suffolk coast) to take around 10 years. Based on projected timelines, it should become operational in the mid-2030s and provide clean power to the equivalent of six million homes.

DESNZ states that Sizewell C is a key step towards the UK’s clean energy superpower mission. And Government analysis shows that the power station, once operational, could save £2 billion a year for Britain’s energy system.

Next steps

The current rates reflect forecast costs to be recovered for the construction phase of Sizewell C, which is likely to take place over the next decade. The RAB levy could rise significantly depending on the actual costs incurred to complete construction.

The short notice period for implementation of the scheme, combined with changeable rates and unknown costs beyond the forecasting periods, add to general uncertainty in the market around energy pricing. The addition of this entirely new levy could affect your energy bill, and have an impact on your budgeting, for 2025 and beyond.

As a consultative decarbonisation partner and electricity supplier for businesses, Drax Energy Solutions will continue analysing the latest developments and offering insights to customers and partners. We’ll also always keep our customers informed of any changes to their bill.

Disclaimer

We’ve used all reasonable efforts to ensure that the content in this article is accurate, current, and complete at the date of publication. However, we make no express or implied representations or warranties regarding its accuracy, currency or completeness. We cannot accept any responsibility (to the extent permitted by law) for any loss arising directly or indirectly from the use of any content in this article, or any action taken in relying upon it.