Disclaimer
The information in this video and article was accurate as of 1 October 2025. We update our TPCs Explained Hub every Spring to reflect any changes.
What is the Regulated Asset Base (RAB)?
The GB electricity sector is implementing a Regulated Asset Base (or RAB) model to fund and support new nuclear power stations and encourage private sector investment.
The model’s used in other utility and transport sectors to finance large scale infrastructure projects. Unlike other models, it provides support throughout the build and operational phases of an asset’s lifetime, rather than only through the operational phase.
The first project gaining support under the scheme is Sizewell C, off the coast of Suffolk in the East of England. However, the RAB model is likely to support other new nuclear assets, as most of the country’s older reactors are expected to come to the end of their operational lives in the coming decade.
How does RAB work?
The RAB charge works by allowing the developer of a major infrastructure project to start recovering costs from consumers while the project is still being built, rather than waiting until it’s operational.
The Government will first approve a major infrastructure project. This is then designated under the RAB model, providing the developer with a predictable revenue stream, reducing the financial risk of the project. Ofgem will determine how much the developer is allowed to recover based on:
- Efficient construction costs
- A fair return on investment
- Performance against milestones
Ofgem will communicate a RAB levy to the Low Carbon Contracts Company (LCCC), who will levy suppliers. In turn, suppliers then collect the RAB charge from consumers, meaning consumers help fund the project over time.
What will RAB cost?
The RAB levy charge is expected to make up around 2% of the bill in 2025.
Instead of commencing the revenue recovery on 1 November, as initially announced by the LCCC, the Interim Levy Rate (ILR) will start from 1 December. The levy itself has also shifted from £3.45/MWh to £3.54/MWh; this will apply for the calendar month of December 2025 before a new levy is set for Q1 2026.
The current rates reflect forecast costs to be recovered for the construction phase of Sizewell C, which is likely to take place over the next 10 years. The RAB levy could rise significantly depending on what costs are actually incurred to complete the construction.
How will RAB be recovered?
Ofgem will let its revenue counterparty, the LCCC, know how much it needs to get from suppliers and, ultimately, end consumers.
The amount will comprise an interim rate, reserve and reconciliation payments, and an operational costs levy. As such, it will be similar to the Contracts for Difference (or CfD) scheme.
Suppliers will have 1 to 3 months’ notice of the charge.
What drives the RAB charge?
The main RAB price driver is the allowed revenues and any adjustments under the scheme. As well as this, the phasing of revenues could alter the cost, as could substantial changes in power demand over which the costs are recovered.
To learn more about the other TPCs in your energy bill, head to our TPCs explained hub using the button below. Or, to understand more about electricity prices, download our latest bi-annual Electricity Prices Explained guide.
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