“The new targets are the result of an increase in the cost components underlying the regulated retail tariffs,” the report said.

The report also said that due to the capital cost of gas and coal-fired plants as well as the increase in costs for green energy compliance, the long-run marginal cost estimate of purchasing power had increased.

“Retail operating costs are also forecast to rise over the next two years based on benchmarks and costs associated with full retail competition.”

Some operators have argued that an additional margin should be included within the regulated retail tariff in order to encourage competition.

In other NSW electricity news, Treasurer Michael Egan has defended recent advertisements for a range of consultants to work on the sale of NSW electricity consulting entity Pacific Power International (PPI).

NSW Opposition spokesman Duncan Gay asked why there had been advertisements for consultants to provide financial advice, legal work and accounting services for the sale rather than having Treasury staff do the work.

“We do not have people sitting around in Treasury waiting for an asset sale,” Mr Egan replied.

Staying with the sale of PPI, according to power industry insiders, any move to dismantle PPI, or a dispersal of the wide range of skills the company has built up over 30 years, could weaken or remove a crucial element in ensuring the security of power supplies along the Australian east coast and South Australia.

“They’ve got rid of the service facilities in Victoria and South Australia with the privatisation of the power industry there,” one consulting engineer at PPI said. “We’re doing a lot of work for them now.”

PPI sources report that interstate customers are perturbed at the prospect of disruption to local PPI services. Consulting engineers at PPI play a major role in regular maintenance, refurbishment, repairs and monitoring operations at Australian power plants.