NSW coal put aside for local market

Coal companies in NSW will need to set aside between seven and 10 per cent of their output for the domestic market as authorities scramble to rein in soaring energy prices caused by the conflict in Ukraine.

Treasurer Matt Kean on Thursday confirmed the expansion of the domestic reservation arrangements to even the playing field among coal producers abiding by the coal price cap.

The NSW government committed to a $125-a-tonne cap on the price of coal sold to local power providers as part of the federal government's interventions in the energy market to keep a lid on prices for households and businesses.

In NSW, there were already coal reservation arrangements in place that meant some producers were required to carve out a large portion of their supply for domestic electricity generation while others were exempt.

Now, most coal producers in NSW will be required to earmark about seven to 10 per cent of their coal for domestic electricity generation.

The state government is consulting with the relevant companies, with the new orders expected to come into force at the end of January.

"I know those currently providing coal for the local market will appreciate that companies enjoying super profits on the back of the war in Ukraine will now do their part for the domestic market," Mr Kean said.

"These new arrangements will help even the playing field among coal producers."

He said it was fair that Australian coal producers provide energy for consumers at domestic prices.

"This coal cap scheme will see NSW doing our part at the request of the Albanese government to contribute to the national solution of this national problem," Mr Kean said.

The new reservation orders follow days of back and forth on the price cap on gas, with gas producers found to be suspending new contracts with retailers until they had more detail about how the price cap works.

The consumer watchdog provided further guidance for the gas market earlier in the week, which the government expects will clear up any uncertainty so that the cap can start driving prices down.

The federal government introduced the price caps and other measures to keep energy prices low in December last year.