For immediate release, 26 October 2021.

Stop Sizewell C denounces the government’s announcement today of legislation for a new tax on consumer energy bills to help build nuclear power stations such as Sizewell C. The Regulated Asset Base (RAB) model would transfer substantial upfront costs, and considerable risk, onto consumers already struggling with rising energy bills and other tax increases. [1] Developer EDF Energy estimates Sizewell C – which does not have planning consent and may never get it – would cost at least £20 billion and has made no secret that the project could not proceed without a RAB. The announcement is clearly earmarked for large-scale nuclear projects, as Rolls Royce says it doesn’t anticipate using RAB for Small Modular Reactors. [2] The government is moving with extreme haste, with the second reading of the bill tomorrow.

“RAB is a desperate measure to attract investment for Sizewell C, a project so toxic that no one wants to pay for it,” said Alison Downes of Stop Sizewell C. “Compared to other energy solutions, Sizewell C is an expensive distraction – too damaging, too slow for our climate emergency and with serious question marks over its reactor technology. [3] Whichever way you look at it RAB spells TAX, with every single energy bill payer forced to contribute to the construction of Sizewell C whether they like it or not, adding to households’ rising costs, the risk of fuel poverty and putting us all on the hook for likely cost overruns and delays.” 

The political favour of allowing use of a RAB model for nuclear has fluctuated considerably: it was reported last year that the Treasury “was not enthused” [4] and this has changed only recently. The lack of appeal of investing in large-scale nuclear has prompted multiple infrastructure investors, including Legal & General, Prudential, Nest, Abrdn and Phoenix Group, owners of Standard Life and Sun Life, to state they have no plans to invest in Sizewell C. [5] This lack of support undermines EDF’s claim that Sizewell C should be majority UK-owned, and shows how RAB’s main purpose would be to incentivise billions of pounds of foreign funding by offering an immediate financial return at households’ expense.  

Nuclear energy is specifically excluded from the government’s ‘Green Gilts’ [6] implying a degree of recognition of market or consumer choice, however RAB would permit no consumer choice, the tax being applied to all energy bill payers in England and Wales, including those on renewable tariffs who have already rejected nuclear energy supplies. 

Almost 100,000 people have signed a SumOfUs online petition objecting to use of the RAB for nuclear projects. [7] Eoin Dubsky, campaigner at SumOfUs said “It is preposterous that consumers should be forced to pay for the construction of big nuclear power projects. Nuclear energy is a technology fraught with difficulties and there are better, cheaper and more sustainable options out there to help guarantee our energy security and get us to net zero more quickly. It’s time the government listened to what bill payers want.”

The most often-quoted example of using a RAB for infrastructure projects is the Thames Tideway “Super Sewer” Tunnel. The capital cost is only a quarter of Sizewell C, and the Financial Times recently revealed that the project developer wants to pass overspends onto consumers, raising the surcharge on bills from about £18 per year to £20-25. The project is two years behind schedule. A further key difference is that those paying are limited to Thames Waters’ customers. [8] While all energy infrastructure would no doubt welcome reduced financing costs, this offer is only being made to nuclear power.

There remain major concerns about Sizewell C’s location on a fragile eroding coastline, in an area with limited infrastructure and where no long term water supply has yet been identified. [9] The planning examination ended on 14 October. The Secretary of State would be expected to rule on planning consent by mid April 2022, with decisions on site licenses and permits likely to follow later in the year. EDF’s Simone Rossi has said he hoped a Final Investment Decision could be made by the end of 2022. [10] China General Nuclear’s removal from the project has not yet been achieved. The project remains subject to value for money assessments amid demands the industry make cost savings of 30%.

High resolution images of Stop Sizewell C protests are available (please credit Stop Sizewell C) of an Advan in Whitehall on 20 October, displaying “RAB spells TAX” outside HM Treasury, BEIS and in Whitehall https://drive.google.com/drive/folders/1h96CMl0v7DT1zxFmhlKRKh16JQTH7l7a 

Notes

1. It is widely accepted that a Regulated Asset Base financing model for Sizewell C would expose consumers to construction and cost overruns and add to rising energy bills 10-12 years before any energy was generated. A RAB-type model for a cancelled plant in the US (Summer in South Carolina) is costing ratepayers $2.3bn, and for another, Vogtle in Georgia, whose costs ballooned, the power company is being allowed to pass a further $2.1 billion in overspend on to consumers. There is little evidence that nuclear electricity can compete cost-wise with renewables. Analysis by Professor Steve Thomas of Greenwich University concluded that it would be decades before EDF’s claim that power from Sizewell C would reduce to £60/MWh was realised. 
2. See Alan Woods, speaking at the UK Sustainable Infrastructure Policy & Investment Online Virtual Summit on 14 September 2021 https://www.youtube.com/watch?v=SmUbk2XPjUI at 7.18:45.
3. EDF claims the EPR reactors at Taishan in China – the only two completed EPRs anywhere in the world – prove the technology works, yet Taishan I has fuel failure after only 3 years of commercial operation. A Freedom of Information request reveals that The Office of Nuclear Regulation has access to very little information about the cause or implications for Hinkley C.
4. Sir John Armitt, Chair of the National Infrastructure Commission in Utility Week, August 2020 https://utilityweek.co.uk/treasury-still-unconvinced-rab-model-nuclear/
5. Legal and General told pension holders it did not plan to invest in Sizewell C and confirmed this at the 2021 AGM. We have secured similar statements from Prudential, Nest pensions, Abrdn and Phoenix Group, owners of Standard Life and Sun Life (correspondence available on request). 
6. The Green Financing Framework published in June 2021 said “Recognising that many sustainable investors have exclusionary criteria in place around nuclear energy, the UK government will not finance any nuclear energy-related expenditures under the Framework.”  However the Green Finance Paper, published 18 October 2021 states “The government has asked the EWG to prioritise considering nuclear power’s role in the UK Taxonomy”
7. Sum of Us petition
8. https://www.ft.com/content/f25e29f9-03b4-43a2-9da5-779bcdc3f883
9. The Sizewell site is considered the most environmentally sensitive in the National Policy Statement EN-6, being wholly within the Suffolk Coast & Heaths AONB. Sizewell C would permanently take around 10 football pitches of rare SSSI habitat at Sizewell Marshes and the RSPB says it could be “catastrophic for wildlife” at Minsmere. Both the RSPB and Suffolk Wildlife Trust oppose Sizewell C. At a meeting with the Environment Agency on 28 September 2021, coastal defences were named as an outstanding issue of concern. EDF has been forced to propose a water desalination plant for the period of constructing Sizewell C, and does not yet have an identified long-term water supply.
10. Financial Times