NSW households are being told to expect lower power bills this winter but critics claim uncapping retail electricity prices will actually have the opposite effect.
The NSW government says it will remove regulation of retail electricity prices, meaning fixed and variable charges will be cut by 1.5 per cent.
NSW Premier Barry O'Farrell says more than one million customers on a regulated price will see the face value of their electricity charges drop.
It will be the first fall in 15 years.
"We are removing one of the main barriers to lower prices - from now on retailers will need to work harder and offer better deals to win customers," Mr O'Farrell said.
However, the opposition argues uncapping electricity prices could send domestic bills sky rocketing.
"By removing the safety net on electricity prices, consumers will see prices soar and families will find it even more difficult to pay their bills," Opposition Leader John Robertson said.
Mr Robertson said the Independent Pricing and Regulatory Tribunal's (IPART) regulated electricity prices were a safety net to stop retailers from overcharging.
In 2013, IPART and the Australian Energy Market Commission (AEMC) found the NSW electricity market was competitive and that regulation was unnecessary.
"In its report, the AEMC highlighted that customers could save $300 to $400 per year from an average household bill of $2,500, simply by taking advantage of the deals offered by electricity retailers to customers on competitive market contracts," Energy Minister Anthony Roberts said.
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