The Nuclear Energy (Financing) Act 2022 (‘the Act’) makes provision for the implementation of a regulated asset base (RAB) model for nuclear energy generation projects. Fundamental to the successful implementation of a nuclear RAB model is a robust revenue stream that ensures a secure and consistent flow of revenues between electricity suppliers and nuclear companies benefiting from the RAB model for the duration of their nuclear project’s regulatory period.
The Act gives the Secretary of State powers to make ‘revenue regulations’ in order to set out the detailed mechanics of how the revenue stream would operate under the RAB model. The Act also places a statutory obligation on the Secretary of State to consult with the persons specified in section 25 of the Act before making revenue regulations. As the consultation will inform drafting of revenue regulations that could support multiple nuclear projects benefiting from the RAB model, responses are also welcomed from any persons with an interest in this policy area.
The consultation document sets out government’s proposals regarding how the revenue mechanics would work under the nuclear RAB model. It is proposed that revenue regulations would largely replicate the provisions of the contracts for difference (CfD) revenue regime primarily set out in The Contracts for Difference (Electricity Supplier Obligations) Regulations 2014 (as amended). As a result, one of the primary focuses of the consultation and accompanying questions is on how it is proposed that the revenue regulations would differ from the CfD revenue regime to account for nuclear RAB specific design mechanics. These matters relate to:
- information sharing mechanics required for the determination of supplier payment obligations under the regulations
- wider information sharing provisions required for the effective functioning of the revenue stream
- the notice period for forthcoming quarterly supplier interim levy rates and reserve amounts
- Secretary of State directions to offer to contract under section 18 of the Act, including considerations relating to the bespoke nature of revenue collection contracts and certain matters the terms of the revenue collection contract must cover
- the revenue collection counterparty notifying the Secretary of State if it considers it is unable to carry out its functions
- the revenue collection counterparty projecting future supplier payment obligations
- potential exemptions to supplier payment obligations
- potential measures relating to vulnerable groups and consumers in receipt of universal credit
- the revenue collection counterparty’s operational costs
The purpose of this consultation is to seek views on the proposals set out in the document to inform the policy behind the revenue regulations. It is expected that the consultation will be of particular interest to the statutory consultees named in section 25 of the Act as well as nuclear developers and other stakeholders who would be directly affected by the proposals for the revenue regulations.
We have also published a consultation stage impact assessment.
Read the BEIS consultation privacy notice.