The cost to deliver electricity to homes must be cheaper in 2019 than it was in 2014, according to the poles and wires legislation introduced to NSW Parliament this week.
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On Tuesday, Treasurer Gladys Berejiklian introduced the legislation required to allow the 99-year lease of 49 per cent of the NSW electricity network.
The lease includes 50.4 per cent of Endeavour Energy, the provider of electricity for the Illawarra.
The introduction of the legislation comes as Endeavour and other providers are appealing against the Australian Energy Regulator's (AER) decision to slash their budgets.
However, a spokesman for NSW Premier Mike Baird said the AER determination would have "no impact on the legislation".
The legislation introduction also precedes the conclusion of an upper house inquiry into the leasing of the state's electricity assets.
Keira MP and opposition spokesman for the Illawarra Ryan Park criticised the government for the early introduction claiming it was one of the largest transactions being proposed by the government and due diligence should be followed.
"The NSW Liberal government are trying to ram this through Parliament before the inquiry has had a chance to do what it was set up to do," Mr Park said.
"The people of the Illawarra have every right to know that this privatisation plan will not hurt their back pocket. Families and the elderly should not be left to foot the bill if this transaction is a failure. Let's not forget that when he was the Treasurer, Mike Baird, misplaced $1 billion. So now are we expected to trust he has got the numbers right?
"The last thing I want to see is a deal that leaves locals worse off."
In Parliament, Ms Berejiklian outlined the "price guarantee" that forms part of the legislation.
"The successful bidder must provide a guarantee that total network charges for the financial year ending 30 June, 2019, will be lower than for the financial year ending 30 June, 2014," Ms Berejiklian said. This is not the same as a guarantee for lower power bill prices for the next five years as the network charges only account for 48 per cent of the total household electrical bill, according to the NSW government.
The Electricity Price Commissioner Dr Allan Fels will be in charge of overseeing this guarantee on network charges is delivered.
Ms Berejiklian said the leaseholder would be required to hold a licence that would impose strict conditions and "protect the interests of the state and consumers". "The licences will: give the state control over the suitability and capability of the network operators; require a continued substantial operational presence in Australia, and set conditions to manage business continuity and reliability, network performance and safety," Ms Berejiklian said.
In the event of a licence breach, the NSW Minister and the Independent Pricing and Regulatory Tribunal (IPART) would have the authority to "step in" and take over the business as an administrator.
The proceeds from the leasing of the poles and wires will go into the Rebuilding NSW fund to pay for a range of infrastructure projects. This includes $350 million for the Albion Park Rail bypass.
"This is a once-in-a-generation opportunity for the people of this state," Ms Berejiklian said.
"Whether for our citizens living in rural and regional areas or in our cities, everybody will be better off should we proceed with these transactions."
