NSW's pricing regulator is seeking public submissions as it reviews wholesale pricing for ethanol used in auto fuels.
The review is part of the NSW government's push to boost ethanol usage to the mandated level of six per cent.
The Baird government in December 2015 announced a range of measures to boost ethanol sales, including legislation that will force small petrol retailers to sell an ethanol blend - potentially driving up the price of petrol.
The state's Independent Pricing and Regulatory Tribunal (IPART) on Monday released an issues paper and said it will seek public comments on the matter until July 18.
It will also individually consult with ethanol producers, petrol companies, industry bodies and government agencies.
The wholesale price set needs to be high enough to encourage producers to manufacture ethanol - and for wholesalers and retailers to sell it - but low enough to make it attractive for motorists, IPART Chairman Peter Boxall said.
While the government has mandated the six per cent level, ethanol sales currently make up about 2.5 per cent of the market.
IPART will consider a combination of looking at the efficient costs of producing ethanol, and the discount required to make the E10 blend more attractive to consumers in place of regular and premium fuels, Mr Boxall said.
The regulator will submit a draft report in September, with final recommendations due by December-end.
Earlier this year, the ruling Liberal party's whip in the NSW Upper House dramatically resigned in opposition to the government's controversial amendments to the ethanol mandate legislation.
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