Privatisation of the poles and wires in NSW will not bring electricity prices down. All it will do is transfer guaranteed returns on investment from government budgets to private shareholders.

Whether the poles and wires are privately or publicly owned, the price of the service they provide to ratepayers is determined by the government according to a formula. That formula guarantees the owners of the poles and wires a return based on the value of their assets. It provides an incentive to increase the value of assets and has led to what has been labelled the "gold plating" of the poles and wires in states where they are owned by the government and also in states where they are owned by private companies.

The pricing formula was first established during the 1990s in preparation for privatisation. It was necessary because transmission and distribution are "natural monopolies" and not subject to competition. Governments traditionally charged electricity rates that covered the actual costs of transmission and distribution and were accountable to the electorate for any dividends they squeezed out of the system. However, private transmission/distribution companies could theoretically charge whatever they wanted because electricity is an essential service and, without competition, the ratepayer would have no choice but to pay.

The pricing formula was supposed to ensure that the future privatised corporations would have an incentive to invest in the infrastructure they owned. This was necessary because in a privatised electricity industry there would be no market mechanism to provide this incentive and no government planners deciding what maintenance and upgrades were necessary in the public interest.

In NSW, that guaranteed handsome return on investment is an annual dividend to government. According to a briefing document sent to National Party MPs by the member for Monaro, John Barilaro, the NSW government received $3 billion last year from assets worth an estimated $30 billion, that is a 10 per cent return after paying off loan repayments.