Labour is promising to cut the average New Zealander's power bill by up to $330 a year if elected to government next year.

It plans to do it by setting up a single buyer, NZ Power, to buy all electricity generation at a fair price.

At a joint press conference Green co-leader Russel Norman outlined a similar policy, although the Greens would introduce an element of progressive pricing.

Norman said each household would receive a 300-kilowatt-hour block on which they paid only lines fees and normal retail costs.

After that they would pay higher prices for additional power used.

"That will save each family $300 a year while encouraging efficient use of power at the margins," Norman said.

Announcing the plans Labour leader David Shearer and Norman said they had been working independently on their policies and realised they were heading in a very similar direction.

While there were differences "at the margin" such as over progressive pricing they believed they could negotiate a compromise.

Labour's finance spokesman David Parker said Labour was open to discussing progressive pricing, but there were issues of equity such as between different regions with different climates.

Shearer said the plan would bring down prices and create 5000 jobs in the wider economy. It would cut the nation's power bills by up to $700 million a year.

The Crown would forgo dividends and tax revenue from the power companies at a cost of $61m-$88m a year.

"I'm not prepared to sit back while power companies cream super-profits at the expense of households and the economy," Shearer said.

As a single wholesale buyer NZ Power would set electricity prices ensuring power companies got a fair prices but not super profits.

The Greens said they also supported a Pharmac-style agency as the go-between for power generation and retail companies.

"NZ Power will give power back to the people," Norman said.

"Its purpose will be to drive hard bargains for cheaper electricity and pass the savings on to consumers."

NZ Power would also prioritise renewable generation and energy efficiency.

A report by BERL economics estimated the creation of NZ Power would increase GDP by $450 million while creating 5000 jobs, and the average household power bill would be cut by 10 per cent.

Shearer said: "Kiwis have been stung by high power prices for far too long."

The policy would likely hit the share price of power companies, including those the Government planned to partially privatise.

Shearer said he had written to the board of the first company up for sale, Mighty River Power, and to shareholding ministers asking them to use their powers to issue a supplementary disclosure.

"This will allow Kiwis who've applied for shares since Monday to reconsider," he said.

"People can choose to buy shares but they don't have a choice about buying electricity."

Economic Development Minister Steven Joyce said the Labour-Green plan was a return to the 1970s-style monopoly provision of electricity. Only North Korea and Venezuela did not think such ideas were nuts.

He said the plan was not similar to Pharmac, because the state pharmaceuticals agency was a single buyer that then distributed through the health system, whereas power companies on-sold to consumers.

"Good on them for giving it a go but it is truly nuts economics," he said.

Joyce said the privately listed company Contact Energy's share price had fallen 3 per cent this morning after the announcement.

"They are actually being quite deliberately sabotaging of the New Zealand economy," he said.

"These guys truly have jumped the shark, I'll tell you."

He said it was a belated apology by Labour for its stuff-ups last time it was in power.

It would also take away the incentive for private companies to build new generation.

Energy Minister Simon Bridges said the market was much more competitive than it had been under the previous Labour Government.