Surging power prices helped lift the NSW government-owned electricity companies to the same level of profitability as Australia's oligopolistic banks, as they boosted profits 50 per cent in the year to June.
Figures released by the NSW Audit Office show the state government's electricity companies earned a combined profit of $1.54 billion in the year to June, up from $1.03 billion a year earlier.
This includes the electricity distributors, which have spent heavily on equipment over the past several years, triggering a round of price increases - and a public backlash that has resulted in lower electricity usage.
Surging profits pushed the electricity companies' return on equity to 15.2 per cent, from 10.7 per cent, well ahead of most ASX-listed industrial companies which earn closer to 10 per cent, and on a par with the big four banks which earn around 14 per cent to 15 per cent.
Additionally, the return on investment of the electricity companies rose to 19.9 per cent from 17.4 per cent, the report by the public audit office found.
This helped boost their overall contribution to the government's coffers to $2.2 billion, from $1.82 billion. This figure includes dividends, taxes and other payments to the state government.
In recent years, the government has sold the retail operations of the electricity companies, such as EnergyAustralia, Integral Energy and Country Energy, and some of the power generators at Lithgow and on the central coast. It is seeking to sell the remaining power generators, and is expected to propose selling all remaining electricity sector assets at the 2015 election.
When it was elected in 2011, the government said it would take $400 million in costs out of the power distributors, to rein in rising power bills. It has succeeded in slicing $1.35 billion off the combined costs of the three power distributors in NSW so far.
"The savings were mainly achieved through fewer capital expenditure programs in light of declining consumer demand, reductions in employee numbers, overtime and discretionary non-labour costs," the report noted.
The audit office also disclosed the power distributors boosted return on equity - a measure of their efficiency - in the 2013 financial year to 21.2 per cent from 15.2 per cent a year earlier. "A rising ratio suggests that an entity is increasing its ability to generate profit without needing as much capital," it noted.
Ausgrid and Essential Energy more than doubled their earnings.