Energy bill cut could be wiped out by nuclear costs, levies, and green charges

07 December 2025 , 23:28

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Rachel Reeves’ promise to reduce household energy bills by £150 might be nullified due to the costs associated with nuclear energy, concealed green levies, and new charges being introduced by the energy regulator, according to reports.

In her Budget last week, the chancellor pledged to reduce household bills by eliminating the Energy Company Obligation (ECO) scheme.

During the election, Labour had promised to reduce bills by £300 through investment in green energy, but this has not yet been realized.

However, former Labour donor and green entrepreneur Dale Vince has now claimed that the costs of expanding nuclear energy capacity, which amounts to £1 billion in the first year and has ongoing expenses, will largely offset the £150 reduction.

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Further analysis indicates that under plans announced by Ofgem, charges on bills to fund gas pipelines and the high-voltage electricity grid are expected to increase by £40 from £222 annually in April when the government’s £150 discount is meant to take effect.

The charges are projected to rise for the next four years, reaching £338 annually by April 2030, according to Ofgem’s impact assessment.

Meanwhile, the Office for Budget Responsibility (OBR) also reported alongside the Budget that £1 billion annually will be added to household energy bills to finance energy secretary Ed Miliband’s next auction for renewable projects, called “allocation round 7” (AR7).

There are concerns that instead of reducing household bills by £150, energy bills will actually rise.

Mr. Vince told The Independent that the chancellor’s highly publicized £1 billion in energy bill savings will be completely negated by the expenses of the Sizewell C nuclear project — costs the government is obligating households and businesses to cover years before construction even starts.

He claimed that the £150 discount is nearly equivalent to the total annual charges that will impact homes and businesses via the Regulated Asset Base (RAB) nuclear levy, created to fund Sizewell C.

He said: “The chancellor’s energy savings will be nullified overnight by the cost of Sizewell. Starting in November, the government has decided to pass the financial risk of this project directly onto our energy bills — before any groundwork begins. And this isn’t some one-off charge.

“We’ll be subsidizing Sizewell for at least 10 years, possibly longer — nuclear projects always face delays. We might still be paying for decommissioning well into the 22nd century.

“Imagine ordering a car and the dealership starts charging you before they’ve even built the factory — that’s the scenario here.

“EDF states that Sizewell will be ready in 2035, but Hinkley Point is 14 years behind schedule and its cost has jumped from £18 billion to £46 billion. Sizewell won’t lower bills or help us reach Net Zero on time — but it will cost us for years.”

He claimed that the additional cost would be at least £35 and could grow to £140 for a small hairdressing salon.

The levy applies to every home and business connected to the UK grid, with only officially exempt Energy Intensive Industries spared. Ofgem has confirmed allowed revenue of £1.4 billion for the first charging period (4 November 2025 to March 2027).

However, the government has disputed Mr. Vince’s figures.

A DESNZ spokesperson said: “This claim is incorrect. Sizewell C will add around £1 a month on average to household bills during construction, a small fraction compared to the average £150 in costs off household energy bills starting in April as announced in the Budget.

“We are ushering in a golden age of nuclear - securing thousands of quality, skilled jobs and billions in investment.

“Sizewell C will provide clean electricity for the equivalent of six million of today’s households for at least sixty years. Analysis shows it could save £2 billion a year across the future low-carbon electricity system once operational, resulting in cheaper power for consumers.”