The suspension of the national electricity market could be lifted as soon as Wednesday, as the market operator looks to outline a path back to normal function of the grid.
The Australian Energy Market Operator said electricity supply would be sufficient for Tuesday night, as it held talks with generators on how the national electricity market could resume.
"AEMO anticipates monitoring will continue for at least 24 hours and, if AEMO is confident the criteria are being met, the next step is to formally remove the market suspension and resume normal operation under the market rules," the operator said in a statement on Tuesday afternoon.
"Irrespective of market operations, underlying factors mean there may continue to be challenges managing supply and demand."
The market operator said the current state of the energy market remained dynamic and that the body may be required to force generators to meet demand.
During talks with generators, the market operator said it outlined criteria of how a normal market could resume and the suspension lifted.
"These criteria will provide indicators of the operability of the market under normal dispatch and pricing rules, to give AEMO sufficient confidence that it can end the market suspension with minimal risk," the statement said.
AEMO said it hoped the path forward would avoid the same conditions in the energy market reappearing in the short term, should the suspension be lifted.
It comes as the consumer watchdog was given additional powers to monitoring energy pricing.
Treasurer Jim Chalmers on Tuesday announced an expansion to the competition and consumer regulator's ability to monitor energy market prices.
"I've maximised (the Australian Competition and Consumer Commission's) monitoring of this really crucial market because we want to make sure that if there's dodgy behaviour going on, we know about it and we can crack down on it," Dr Chalmers told reporters in Brisbane.
The ACCC will make recommendations to the government on further steps that could be taken to address operator pricing.
Business confidence is being challenged by increasing costs across the board and energy prices are expected to add to existing pressures, the Australian Chamber of Commerce and Industry (ACCI) warned.
Surging energy prices are feeding into input costs which reduces profits, ACCI chief executive Andrew McKellar said.
"There is a good underlying level of economic activity but there are headwinds," he said.
"It's a clear indicator that inflation is becoming the number one policy challenge in Australia at the moment."
The discussion comes as Australia's first community-owned electricity retailer has fallen victim to the energy crisis.
Based in Byron Bay, Enova Community Energy and its retail energy arm Enova Energy have been placed into voluntary administration, impacting its 13,200 customers across NSW and southeast Queensland.
"The market is broken and does not support small retailers," Enova chief executive Felicity Stening said on Tuesday.
She said constant regulatory changes by state and federal governments were adding to market complexity and had caused Enova delays in being able to fund and resource energy innovation.
A proposed capacity mechanism is being discussed by state and territory energy ministers as a tool to ensure reliability of power supply amid the unprecedented period of transition.
Coal and gas - as well as renewable power technology - would be eligible for payments, with the market operator responsible for forecasting, buying enough capacity and determining demand.
But the mechanism will not come into effect until 2025.