Electricity prices could be headed for a decline in real terms in NSW for the first time in living memory. The industry regulator has flagged a reduction could be in order, thanks to a decline in interest rates and slowing spending by the big network owners such as Ausgrid and Endeavour Energy.

The signal comes at the start of a new regulatory regime, which is aimed at preventing "gold plating'' of the network following a period of massive spending, which has rivalled the $30 billion-plus cost of the national broadband network.

The Redbank power station in the Hunter Valley.

The NSW government-owned network companies - Ausgrid, Endeavour Energy and Essential Energy - have applied to raise prices around 2.2 to 2.4 per cent a year over the next five years, a little less than the expected rate of inflation.

However, the chairman of the Australian Energy Regulator, Andrew Reeves, said yesterday price declines might be in order. Five years ago, interest rates were high due to the global financial crisis, he argued.