New South Wales is prepared to agree to a price cap on coal without compensation to provide energy price relief to consumers and business, adding pressure on Queensland to follow suit.
NSW’s treasurer and energy minister, Matt Kean, told reporters in Brisbane on Thursday that his state was “almost ready to sign up” to limiting the price of black coal, which in turn sets wholesale electricity prices in the state about half the time.
“It’s not about royalties, it’s all about consumers,” Kean told reporters as he arrived for a five-hour meeting of federal, state and energy ministers, in comments broadcast by Sky News. “NSW is prepared to take the hit” by not seeking compensation.
Guardian Australia understands the coal price cap being discussed remains at $125 a tonne. For gas, the limit being negotiated between governments is between $12 and $14 a gigajoule.
The Queensland government expects to face increased pressure to accept gas and coal price caps with reduced compensation if NSW unilaterally signs on to the federal plan.
A spokesperson for federal energy minister, Chris Bowen, who arrived at the ministerial conference with Kean, declined to comment.
The energy ministers’ meeting itself was not focused on the price cap debate, given the final decisions will be made between the prime minister, Anthony Albanese, and his state and territory counterparts at a meeting planned for Friday. That meeting was to have been held yesterday before Albanese contracted Covid, prompting a two-day delay.
Energy prices have become an increasingly fraught issue for governments and also contributed to Australia’s highest inflation rate since 1990.
Australia’s abundance of energy resources has not shielded it from a global surge in energy costs in the wake of Russia’s invasion of Ukraine 10 months ago. Western Australia, however, is the exception where a 15% share of gas output is reserved for local consumers, leaving prices as low as a quarter of those being endured in the east.
The energy ministers, meanwhile, have been working through an agenda that includes plans for a mechanism to drive more investment into large-scale batteries and other forms of storage.
Such a scheme would probably set up a minimum price to support operators of the storage. Should prices rise beyond a set higher level, profits would be shared between the storage operators and the government support agency.
Related renewable energy plants may also get added incentives.
Energy ministers will hold a media conference after 4pm AEDT.