Export-focused coal companies will now be required to provide cheaper coal to NSW power stations under revised coal reservation policy directions.
NSW Treasurer Matt Kean said the extension of the controversial policy to cover export-focused mines would level the playing field among coal companies as part of the Commonwealth Government's coal price cap.
"In response to soaring coal prices caused by the war in Ukraine, the Albanese Government asked NSW to introduce a coal price cap to put downward pressure on electricity prices," Mr Kean said.
"As a result of our efforts, federal Treasury analysis shows that future electricity prices for NSW have dropped by 41 per cent since the price caps were announced."
The latest development comes despite concerns from the coal industry about the inclusion of export-focused mines in the policy.
BHP NSW Energy Coal Vice President Adam Lancey said on Thursday that significant uncertainty remained about how the revised directions would operate.
"Government intervention in markets risks negative long-term outcomes, and we do question whether these new directions will help to lower prices for households and businesses," he said.
"There is still significant uncertainty as to how the directions will operate in practice, and we remain concerned about the impacts to Mt Arthur Coal's operations and business model, regional infrastructure such as the rail network, and our commitments to the community."
"We will continue to engage with the NSW Government, the Australian Energy Regulator and power station operators to mitigate negative impacts on communities, customer relationships and operational plans."
NSW Minerals Council chief executive Stephen Galilee called on the State Government to release modelling that proved its policy had been effective at reducing power bills.
"If Matt Kean is so sure his coal price cap will reduce power prices he should immediately release any modelling and analysis he has to prove the specific impact of the coal cap on power bills," he said.
"Global coal prices have fallen nearly 50 percent since December, yet energy bills in NSW are still sadly set to increase.
"When that happens, energy ministers won't be able to blame coal prices, or Putin's war, or anybody else, because the policy failure will be theirs."
Mr Kean argued the revised policy position represented a "modest ask" of coal producers, who exported more than $61 billion of coal from Newcastle last year.
"Where possible, 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."
The 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.
In his recent letter to Mt Arthur employees Mr Lacey said the company's primary concerns about the coal reservation policy related to the potential impacts on the mine's operations and business model, including what to do if production costs increase to above the price cap.
"While we support affordable energy prices for NSW households and businesses, we have doubts about the directions' ability to achieve this,"," Mr Lancey wrote.
"As a general point, BHP is opposed to market interventions because short-term measures can have negative long-term impacts: in this case businesses may think twice about investing in NSW."
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