The Australian Energy Regulator (AER) has today published a guidance note for NSW coal suppliers to outline our approach for assessing their production costs and fair margin.
As part of the Coal Market Price Emergency (Directions for Coal Mines) Notice 2023 made by the NSW Minister for Energy (Minister), coal suppliers can apply for a higher price cap for thermal coal if their production costs, with a fair margin, exceed the directed price cap.
The guidance note outlines the AER’s expectations on the information coal suppliers need to provide to the Minister and our assessment approach for evaluating these applications. Following our assessment, the AER will advise the Minister on whether to alter the price cap. The Minister is responsible for making the decision.
The AER has designed the guidance note to minimise the regulatory burden imposed on coal suppliers, while ensuring we obtain sufficient information to allow us to make a timely and informed assessment.
Background
The guidance note is linked to the new monitoring, compliance and advisory powers the AER acquired in February 2023, following Energy Ministers agreeing to interventions in wholesale gas, coal and electricity markets.
The AER is appointed as a regulator under the NSW Energy and Utilities Administration Act (NSW) 1987 and tasked with assessing coal supplier applications and providing advice to the Minister where the supplier considers its costs cannot be fully recovered under the directed price cap.