It’s looking like a deal is close on the capping of coal prices.

New South Wales and Queensland are being asked to temporarily cap prices at 125 dollars for each tonne of coal used by power generators.

The move will shave billions in revenue from the state’s budget coffers.

Details of any compensation deal haven’t been announced but New South Wales Treasurer and Energy Minister Matt Kean says he’s prepared for the state to take a budget hit and that NSW will forego any royalties.

However, Dominic Perrottet’s office says New South Wales will seek compensation.

Press PLAY below to hear Deborah Knight’s breakdown