IPART periodically determines a ‘reasonable wholesale price’ for ethanol for use in the production of petrol-ethanol blends such as E10.

The current determined wholesale price is here.

Our approach to determining wholesale prices depends on the level of competition in the retail and wholesale markets. Where there is effective competition in one or both of these markets, it will protect customers from excessive prices.

In the NSW retail market, around 20% of the fuel sold is E10. E10 competes with regular unleaded petrol (“U91”), and premium fuels, which limits the price that suppliers can charge for ethanol. If the wholesale price of ethanol is too high, the retail price of E10 would rise relative to other fuels and customers would switch fuels.

Because this competition protects customers from excessive wholesale prices, we set wholesale prices based on an estimate of the market price of importing ethanol (the “import parity price” or “IPP”). This approach reduces the risk of the determined wholesale price being set too low, which could impact the financial viability of ethanol suppliers and discourage new entry.

We adopted this approach in 2016, taking into account the matters in the Biofuels Act, and after extensive consultation with stakeholders. Since then, we have periodically reviewed our approach and sought stakeholder feedback. 

The import parity price is based on a nine-month average (to one month prior to the commencement of the pricing period) of weekly import parity price estimates based on the lowest cost origin for ethanol from either the US or Brazil plus the current rate of fuel excise.

More information on our methodology, and why we consider it is the most appropriate approach is available in our 2021 ethanol market monitoring report.