News & insights

Ofgem has published its Economic Guidance for the economic regulation of Sizewell C, a new 3.2GW nuclear power station under development in Suffolk and the first in the UK set to be funded through a Regulated Asset Base (RAB) model. The guidance explains Ofgem's approach and principles it expects to use when making decisions that affect Sizewell C as a nuclear licensee.

Since 2022, CEPA has been providing expert support and advice to Ofgem on the development of the Nuclear RAB model for Sizewell C, covering a range of areas including cost of capital issues and incentive design. Alongside the Economic Guidance, Ofgem also published CEPA's advice on how to set an appropriate asset beta for Sizewell C during the operational phase of the regulatory regime.

In our report, we devised a five-step approach to setting the asset beta, drawing on the capital asset pricing model (CAPM) framework, and provided an indicative asset beta range using contemporary evidence. CEPA's advice was used by Ofgem to provide further indicative guidance to possible investors during the equity raise process for Sizewell C, and has also informed Ofgem's approach as set out in the Economic Guidance document.

We are pleased to have supported Ofgem in providing greater clarity to potential investors in this space and in advancing policy thinking with respect to the use of RAB regulation for new nuclear generation.

You can read our report and the Economic Guidance document here