The construction of up to eight proposed new power stations will be funded by using a “Regulatory Asset Base” funding model which places the cost on the energy consumer rather than taxation.
RAB has been widely used in the UK to fund capital expenditure in privatised utility companies. It has, however, proved a problematic approach, often resulting in high charges for consumers, and excess profits for the equity owners: witness the privatised water companies in England. ― It will be particularly difficult to apply RAB successfully in nuclear projects, because of the long construction periods, and the long operational lives of the assets once completed. The paper illustrates the scale of the windfall profits which could well result for the equity owners in nuclear RAB projects.