NSW Treasurer and Energy Minister Matt Kean says emergency powers to control the state's coal supplies are a precautionary measure to "keep the lights on and the system going".
Mr Kean said he asked the NSW Governor, Margaret Beazley, to grant him the temporary powers on Thursday night, following advice from the Australian Energy Market Operator (AEMO).
The special powers give the Energy Minister the authority to declare the supply and distribution of coal as an essential service.
It means Mr Kean now has the authority to order coal producers to increase supply or facilitate the delivery of coal to electricity generators.
The powers will be in force for a period of 30 days unless revoked sooner.
"We want to make sure that we've got everything in our toolkit to keep the system running," Mr Kean said today.
"We're just taking a proactive step that will support us if there's issues with fuel security, if there's issues with logistics in getting fuel to the site of the generators."
Australia's eastern states are facing an ongoing threat of power shortages and blackouts due to a prolonged energy crisis.
It forced the market operator AEMO to seize control of the national energy market this week to direct generators to ramp up energy supplies.
AEMO said energy reserves had improved but it warned the energy sector still faced significant challenges such as fuel costs and sourcing issues.
Mr Kean said NSW currently had enough coal but agreed fuel security was a concern.
"Right now fuel security is fine," he said.
"But we're just putting those powers aside and on standby if we need them.
"We're just giving ourselves all the levers we need to give the community certainty that we're doing everything we can to keep the system going."
Australia's energy crisis has been driven, in part, by rising wholesale gas prices due to the Russian invasion of Ukraine.
That triggered a surge in the wholesale price of electricity and forced AEMO to instigate a price cap.
The $300 a megawatt price cap meant it cost more for generators to supply electricity than they could sell it for.
The European Union has agreed to impose a ban on Russian coal imports which will take effect from August 10.
Mr Kean said the Russian sanctions would put pressure on the wholesale price of coal but said he did not anticipate it would create a coal shortage in NSW.
"The war in Ukraine is having an impact on commodity prices as Europe stops sourcing its gas and coal from Russia," he said.
"Obviously that's changing the spot price for coal here in NSW, as it is right across the country.
"What we're doing is making sure we're continuing to deliver coal for NSW."
Mr Kean said a number of NSW coal producers only supply fuel to the domestic market.
NSW Opposition Leader Chris Minns said he was "really concerned" by some of the decisions made by Mr Kean and Premier Dominic Perrottet in the "energy space".
"If you think about it, there's one minister responsible for the energy crisis that we have in NSW and the cost of living crisis that families are facing and that's Mr Kean," Mr Minns said.
"He's been the Energy Minister for a long time, he's been the Treasurer for the last year and I think under his tenure, things have gotten worse."
Mr Minns said the decision of the previous Liberal governments to sell off government assets, in particular, electricity companies had led to a "ridiculous situation".
"Obviously, privatisation hasn't worked in the electricity markets, it hasn't worked in relation to toll roads, it hasn't worked in relation to ports," he said.
