CCL Increases and Nuclear RAB Levy Update

Structural Cost Changes Businesses Can’t Afford to Ignore

For years, energy strategy conversations have centred on wholesale price volatility. Forward curves, fixed contracts and market timing dominated boardroom discussions. 

That paradigm is shifting. 

UK electricity costs are increasingly shaped by structural, policy-driven charges embedded directly into consumption. Confirmed increases to the Climate Change Levy (CCL) and updated forecasts for the Nuclear Regulated Asset Base (RAB) Interim Levy Rate (ILR) reinforce a broader trend: non-commodity costs are becoming a material and growing component of business energy spend. 

This is not short-term volatility. It is systemic cost evolution. 


Climate Change Levy: From Background Charge to Structural Cost 

The Government has confirmed two staged CCL increases:

• From 1 April 2026: ~0.801p per kWh

• From 1 April 2027: ~0.827p per kWh

CCL is entirely consumption-based. It scales directly with electricity and gas usage and is passed through within contract structures. There is no mechanism to hedge it and no negotiation over its application. 

For larger portfolios, this is no longer marginal. It is a recurring structural cost that must be embedded within three- to five-year financial modelling. 

Organisations eligible for Climate Change Agreements (CCAs) should ensure relief mechanisms are fully optimised. For others, the only meaningful lever is demand reduction. 


Nuclear RAB Levy: Infrastructure Funding Embedded in Bills 

Introduced in November 2025, the Nuclear RAB Levy represents a fundamental shift in infrastructure financing. Rather than investors carrying construction risk alone, electricity consumers now contribute to funding new nuclear capacity — beginning with Sizewell C — during the build phase. 

The levy is set quarterly via the Interim Levy Rate (ILR) by the Low Carbon Contracts Company. 

Confirmed ILR Rates

• Nov–Dec 2025: ~£3.455 per MWh

• Jan–Mar 2026: ~£3.663 per MWh
  (Approximately 0.35–0.37p per kWh)

2026–27 Forecast Range 

Current projections indicate the ILR is likely to move within:

• £3.50–£4.50 per MWh

• (~0.35p–0.45p per kWh)

As capital deployment accelerates during peak construction phases, upward pressure cannot be ruled out. The quarterly adjustment mechanism introduces an additional layer of forecasting complexity for electricity-intensive organisations. 

For high-load operations, this becomes a meaningful non-commodity cost layer — and one that will evolve over time. 


The Combined Effect: Embedded Electricity Cost Escalation 

For a business consuming 1,000,000 kWh annually in 2026–27, indicative exposure could sit in the region of:

• CCL: ~£8,000

• RAB (forecast ILR range): £3,500–£4,500

• Combined levy exposure: ~£11,500–£12,500 per year

This sits alongside wholesale pricing, network charges (DUoS/TNUoS), capacity market costs and other environmental obligations. 

For multi-site estates and industrial portfolios, the scale increases rapidly. 

The critical distinction: this is not market-driven fluctuation. It is embedded cost architecture. 


The Strategic Implications 

1. Electricity Is Becoming Policy-Weighted 

As businesses electrify fleets, heating systems and industrial processes to meet decarbonisation targets, exposure to electricity-linked levies increases proportionally. 

Electrification without structured modelling may unintentionally accelerate operating expenditure. 

The intersection between decarbonisation strategy and structural cost exposure is now a board-level consideration. 

2. Levy Forecasting Is a Core Financial Discipline 

With CCL rising on a confirmed schedule and ILR updated quarterly, organisations should treat non-commodity charge modelling with the same rigour as interest rate or FX exposure. 

This means:

• Stress-testing upper-range ILR scenarios

• Embedding structural levy growth within medium-term budgets

• Ensuring procurement and finance functions operate from aligned assumptions

• Energy strategy has evolved from tactical purchasing to structured cost risk management.

3. Demand Reduction Has Multiplied Value 

Both CCL and RAB are consumption-driven. 

Reducing electricity usage now removes multiple cost layers simultaneously:

• Wholesale energy

• Network charges

• Environmental taxation

• Infrastructure levies

Each kilowatt-hour avoided carries compounded financial impact. This materially alters the return profile of efficiency and optimisation initiatives. 

Projects that previously delivered marginal payback may now generate structurally stronger returns when levy avoidance is properly modelled. 


The Direction of Travel 

UK energy policy is embedding environmental taxation and infrastructure funding directly into electricity consumption. 

Structural charges will not retreat. They will evolve. 

Organisations that quantify and actively manage this exposure will strengthen margin resilience and forecasting accuracy. Those that treat policy-driven charges as peripheral will experience steady, avoidable cost erosion. 

The conversation is no longer simply about today’s unit rate. 

It is about tomorrow’s total cost base. 


True Group Perspective 

At True Group, we don't view CCL and RAB as isolated charges, but as indicators of systemic change in the UK energy framework. 

We support customers by:

• Modelling forward levy exposure across portfolios

• Stress-testing electrification plans against non-commodity growth

• Ensuring contract structures align with structural cost realities

• Identifying demand reduction strategies that mitigate embedded levy escalation

If you would like to discuss how these developments apply to your portfolio, please speak with your True Group account manager.