The New South Wales Liberal and Nationals Government has implemented a coal price cap to level the playing field among coal companies, in response to the soaring coal prices caused by the war in Ukraine.
This will require both domestic and export-focused coal companies to provide cheaper coal to New South Wales power stations.
New South Wales Treasurer and Minister for Energy, Matt Kean, said the Federal Government asked New South Wales to introduce a coal price cap to put downward pressure on electricity prices.
“As a result of our efforts, the federal Treasury analysis shows that future electricity prices for New South Wales have dropped by 41 per cent since the price caps were announced,” Mr Kean said.
Mr Kean called this a modest ask of coal producers, who exported more than $61 billion of coal from Newcastle alone in 2022.
“Coal mines will be required to provide power stations with the amount of coal they have supplied in the past, and export-focused mines will be required to provide additional coal needed to meet any difference,” Mr Kean said.
“Export-focused coal mines that are now covered by the expanded directions will be required to provide no more than five per cent of their production.”
These directions do not require any coal mine to break a pre-existing contract, including evergreen contracts to avoid impacting long standing international commercial arrangements.
Under the national Energy Price Relief Plan, coal suppliers can apply to the Australian Energy Regulator for a higher price cap if they can demonstrate that their costs of production are above the $125 per tonne coal cap.
