But under some options being canvassed by the government, power generators would have difficulty predicting their future carbon costs because of complex ''top-up fees'' on international permits, in turn making it impossible to make forward contracts.
This ''could increase volatility in the electricity market and further increase electricity prices'', the Energy Supply Association of Australia has warned in a submission to government.
Modelling commissioned by the association found that a 5 per cent fall in contracting in the National Electricity Market could lead to a 10 per cent rise in retail electricity prices for households and 15 per cent for large users. Treasury's modelling on the cost of the tax has estimated electricity prices will rise by about 10 per cent.
A spokesman for Climate Change Minister Greg Combet said loans would be available to eligible electricity generators to buy future carbon permits.