Government plans to attract investors by making taxpayer help pay for cost overruns
'The government has confirmed plans for consumers to begin paying for new nuclear reactors before they are built, and for taxpayers to pay a share of any cost overruns or construction delays.
In a consultation document launched on Monday night, officials said the model is “essential” to attract private investors to back the UK’s new nuclear ambitions at a price that is affordable for bill payers. The public purse would also compensate nuclear investors if the project was scrapped.
The new funding structure could be used to prop up EDF Energy’s £16bn plans for a new nuclear reactor at Sizewell B in Suffolk, which was left in doubt after fierce criticism of the costs surrounding the Hinkley Point C project in Somerset.
It could also resurrect the dormant plans for a £16bn new nuclear reactor at the Wylfa project in North Wales, which fell apart last year due to the high costs of nuclear construction.
The so-called “regulated asset base”, or RAB model, helps to make major infrastructure projects cheaper by shifting the risk of spiralling costs from the developer to the taxpayer.
It is the same model used to fund London’s £4.2bn super-sewer project, the Thames Tideway Tunnel, which has drawn criticism for raising water bills while investors reap financial rewards.
An EDF Energy spokesman said the model will lower the cost of financing nuclear plants, which will benefit consumers through their bills.
The company added that Sizewell C will be cheaper to finance and build than Hinkley Point C because it is “a near replica” of its forerunner which is already being constructed on time and to budget.'
Read more: New UK nuclear plants could be paid for upfront by taxpayers