NSW Premier Barry O'Farrell has announced his government will privatise the state's electricity generators but retain the network businesses, or "poles and wires", in public ownership.

Mr O'Farrell and the Deputy Premier and leader of the Nationals, Andrew Stoner, announced the decision following a marathon three-hour joint party room meeting this morning.

It followed a special meeting of the cabinet, which endorsed the recommendations of the Tamberlin inquiry into electricity privatisation, handed down three weeks ago.

Mr O'Farrell said the cabinet had endorsed the sale of the generators, electricity development sites owned by the government and the Cobbora coalmine - all of which was recommended by the former federal court judge, Brian Tamberlin.

He would not place any estimate on the amount the government expected to recoup from the sale because it was "for the market to decide", but estimates are $5 billion.

He said cabinet had decided to not sell the poles and wires - worth up to $30 billion by some estimates - to keep a pre-election promise that they would be kept in public hands.

"This package means we are honouring our election promise in full," he said.

The decision comes not long after the chairman of Infrastructure NSW, Nick Greiner, declared the government had "no option" but to sell the poles and wires if it wanted to "move the needle" on infrastructure provision in the state.

Legislation to enact the sale is expected to be introduced when Parliament resumes early next year.

AAP reports: Opposition Leader John Robertson said the NSW government's power sell-off would add to household electricity bills.

"Barry O'Farrell is set to slug households more than $550 a year on their electricity bills, an increase many families will be unable to afford," he said in a statement.

"The Premier needs to stop and think about the human cost of his power privatisation plans."

He said the move would also lead to more households being disconnected from the energy grid due to financial hardship.