The federal government’s plan to cap coal prices to help reduce energy bills will be at the centre of a meeting between Australia’s leaders.

Prime Minister Anthony Albanese will meet virtually with the premiers and chief ministers for national cabinet on Friday when they will discuss how to ease pressures on households struggling with soaring energy costs.

Energy Minister Chris Bowen on Thursday announced his state and territory counterparts had agreed to a capacity mechanism that would rely on renewable energy, which he described as “keeping the lights on”.

NSW Energy Minister Matt Kean said his state does not need compensation for lost coal royalties due to the coal cap but called for financial assistance to support families and businesses.

“We’re very close to landing a deal,” he said.

“NSW wants to work with the Commonwealth to ensure that we protect not only electricity users in NSW but indeed electricity users across the national energy market. We will do our bit.”

Queensland Energy Minister Mick de Brenni – whose state has been calling for compensation – said he would brief Premier Annastacia Palaszczuk before the meeting. 

The October budget forecast a 56 per cent increase in electricity prices and 44 per cent rise in gas prices for households in the next two years.

National cabinet was delayed for two days and will be held virtually after Mr Albanese tested positive for COVID-19 on Monday.

The leaders will discuss COVID funding arrangements for hospitals as the nation braces for another wave.

Disaster management planning is also on the agenda as the country enters a high-risk summer.

By Tess Ikonomou in Canberra