Poor households could carry cost of funding nuclear plant

The government has been criticised for exposing low-income households to the cost of building the Sizewell C nuclear power plant while letting factories “off the hook” as a crucial planning decision is expected this week.

If it is given the green light, the government hopes to use a regulated asset base (RAB) funding model to finance the project, which is being proposed by the French energy firm EDF. RAB reduces the risk to investors, who will receive regular payments before the project begins generating power. But it also means households pay for the construction costs through higher energy bills.

A consultation on the use of the RAB model is due to close next month. It shows operators in energyintensive industries would be exempt while households receiving universal credit will have to pay.

In the consultation, officials said the exemption for high energy users – such as factories – would avoid the risk that they would be forced to add the costs to the price of their products, which would put them at a “significant competitive disadvantage” when operating in international markets.

MPs had suggested electricity suppliers should be prevented from recovering the costs of their RAB payment obligations from consumers claiming universal credit.

However, officials rejected this idea, arguing that such a measure could “disincentivise suppliers from engaging in commercially beneficial practices” to attract consumers such as payment plans and loyalty benefits. They also argued that other vulnerable consumers not claiming universal credit could also be affected by the move.

Caroline Lucas, a Green party MP, said: “When energy bills are skyrocketing right in the middle of a cost-of-living scandal, the last thing that people can afford is the ballooning cost of embryonic nuclear white elephants like Sizewell C.

“Not only are these projects extremely expensive to build in the first place, with Hinkley Point C now at £26bn without having generated a single watt of energy, the RAB business model passes that enormous upfront cost directly on to the consumer. While giant companies are spared with generous exemptions, the very worst-off in society will be footing the bill. Nuclear is too slow, too expensive, and the wrong priority.”

The 3.2 gigawatt plant at Sizewell in Suffolk could be capable of generating electricity for 6m homes and is part of a project to approve a nuclear reactor each year by 2030.

The Department for Business, Energy and Industrial Strategy (BEIS) said that “the government considers it very important to support lowincome households” but believes “support for vulnerable groups would be best tackled holistically” by looking at the factors driving up energy bills.

BEIS has estimated that Sizewell will add an extra £1 a month to household bills to aid construction costs. But research by the University of Greenwich Business School seen by the Guardian shows the average monthly cost could reach £2.12, or £25.40 a year.