The UK government has been criticized 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 due this week.
If 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. However, it also means customers pay for the construction costs through higher energy bills.
A consultation on using the RAB model is due to close next month and shows operators in energy-intensive industries would be exempt but households receiving universal credit would have to pay.
In the consultation, officials said the exemption for electricity-intensive users – such as factories – would avoid the risk of putting them at a “significant competitive disadvantage” when operating in international markets as they may have to add the costs to the price of their products.
MPs had suggested electricity suppliers should be prevented from recovering the costs of their RAB payment obligations from consumers who are on universal credit.
However, officials rejected this idea, saying such a measure could “disincentivise suppliers from engaging in commercially beneficial practices” such as payment plans and loyalty benefits to attract customers. They also argued other vulnerable consumers not claiming universal credit could also be affected by the move.
The Green party MP, Caroline Lucas, 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.
Alison Downes, of the Stop Sizewell C campaign, said: “Taxes of any kind hit the poorest hardest and this nuclear tax is no exception. Multimillion-pound businesses will be let off the hook if they use a lot of energy but a family on universal credit struggling to afford its heating bills will have to cough up to pay for an unwanted nuclear power station.”
The Department for Business, Energy and Industrial Strategy (BEIS) said the government considered it very important to support low-income households but believed that “support for vulnerable groups would be best tackled holistically” by looking at the factors driving up energy bills.
BEIS has estimated that Sizewell C would 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.
In January, the government earmarked £100m to advance Sizewell C to the next stage of negotiations, and help the project attract further private investment. In May, it pushed back the deadline for a decision on a “development consent order” for Sizewell C from 25 May to 8 July.
Ministers have tasked Barclays to lead a search for investors to back the project alongside the government and EDF, which each plan to take a 20% stake. That structure would force out CGN, the state-backed Chinese nuclear specialist that has a 20% stake in Sizewell C venture.
According to the Mail on Sunday, the British Gas owner, Centrica, is considering taking a stake.
CGN has partnered with EDF on the Hinkley Point C in Somerset – which has been delayed and is over budget – but ministers want to avoid further Chinese involvement amid worsening relations between the UK and China.