There’s a bunch of highly misleading statements that the Government is to adopt so-called ‘Regulated Asset Base’ (RAB) financing of nuclear power projects. Yes, some of the mechanisms that are being proposed are also used in RAB, but the term is being grotesquely distorted to hide the fact that this is a cover for the Government risking very large sums of money to be lent to nuclear power developers. Put simply, if the nuclear power projects are as expensive as they usually are the electricity consumer will lose an awful lot of money and prices will be jerked upwards. Either that or the taxpayer takes a hit and funding of public services suffer big time. You can see the cover up printed in the Sunday Times yesterday where, we are told that ‘Ministers are expected to accelerate plans to introduce regulated asset base (RAB) financing, which is popular in the water and infrastructure sectors, for nuclear plants including the Horizon project’. Under such schemes the developers are allowed to charge consumers in advance for the capital building projects. What Ministers are not emphasising of course, is that in industries such as water the Government does not lend lots of money to the privatised companies. They raise this on private markets. But in the case of nuclear power plants the bulk of the money needed to build them will be borrowed from the Government. So if the nuclear plant has very big delays and cost overruns (as has happened to ALL nuclear power plant built in the West this century), the Government loses shedloads of money. The Treasury is likely to insist that this gets paid for by adding the (large) sums to electricity consumer bills. RAB has been used to try to finance nuclear power plant in the USA, in the states of Georgia and South Carolina recently. The result was disaster and the developing company, Westinghouse, went bust. But this was ‘normal’ RAB where the developer takes the risk of cost overruns. But in the proposed UK nuclear version it will be the electricity consumer who goes bust when the almost inevitable cost-overruns set in! The nuclear RAB is really a cover for a nuclear bailout. So let’s call it a ‘nuke bailout RAB’.
Dave Toke’s Blog 14th Dec 2019 read more »
Wylfa doubts could force nuclear finance reform. As the industry awaits the decision on the future of Wylfa Newydd nuclear plant, the UK government is set to rethink its nuclear strategy after the failure of other projects such as the NuGen’s Moorside plant.
New Civil Engineer 15th Dec 2019 read more »