Plans to reduce the cost of E10 petrol to give motorists a cheaper alternative to regular unleaded have been dealt a blow after the independent regulator proposed a higher than expected recommended maximum wholesale price for ethanol.

In December, Innovation Minister Victor Dominello announced changes designed to “put downward pressure” on the price of E10, which is a blend of regular unleaded and up to 10 per cent ethanol.

They included requiring a wider range of petrol stations to sell E10, establishing an online fuel price board and asking the Independent Pricing and Regulatory Tribunal to regulate the wholesale price of ethanol.

Regulating the wholesale price was designed to deliver a significant price difference between E10 and regular unleaded to improve competition.

But in a draft determination on Tuesday, IPART announced a recommended maximum wholesale price of $1.35 a litre, significantly higher than the current 60-80¢.

IPART chairman Peter Boxall said the price was “unlikely to affect the price of E10 at the pump”.

“We don’t expect ethanol prices will rise to the level of our recommended maximum price,” he said in a statement.

The draft report notes that “some stakeholders might have expected that a recommended maximum price would need to be much lower to ensure E10 is available at an attractive price”.

“However, there is a risk that recommending a much lower maximum price at this time may not support a sustainable biofuels industry in NSW,” it says.

The report says competition in the wholesale ethanol market is the best way “to support the availability of E10 to consumers at an attractive price and achieve the objective of a sustainable biofuels industry in NSW”.

Mr Dominello encouraged the public and stakeholders to make submissions on the draft report by November 25.

The ethanol reforms were announced to meet the requirement in the Biofuels Act that says 6 per cent of all petrol sold by major retailers is ethanol. The current level is 2.5 per cent.

But they have been controversial amid warnings that retailers forced to sell E10 for the first time need to increase the price of petrol to recoup the cost of equipment upgrades.

Fairfax Media has also revealed that ethanol producer Manildra secured 20 meetings with NSW ministers and donated more than $160,000 to the Coalition in a ferocious lobbying effort before the introduction of new laws.

Extracted from Sydney Morning Herald.