NSW has passed "extraordinary" laws allowing the federal government to reduce power bills through its national energy plan.
Legislation was passed in Canberra last week to help lower power bills, but required laws passed by the states to come into full effect.
Premier Dominic Perrottet recalled NSW MPs on Wednesday to debate amendments to an existing bill, after the parliament disbanded last month for the March 25 election.
The bill, passed in both houses on Wednesday, allows the government to force coal companies to cap prices at $125 a tonne and gas companies at $12 a gigajoule.
Australians can expect to pay about $230 less on their power bills annually once the laws come into effect, about midway through next year.
Until then, power bills will likely continue to rise.
"Extreme price increases in coal and gas are driving up the cost of production, which is being passed on to families and businesses," the premier told the parliament.
"That is why national cabinet agreed to cut the price of gas and coal use for electricity generation ... as part of a national solution to bring down the cost of energy for Australian families and businesses.
"We've recalled the parliament in highly unusual circumstances due to the urgent need to deliver real relief to the families of NSW."
The measures will expire in June 2024, with Mr Perrottet calling the intervention important, but also extreme, and requiring a hard end date.
"It is important that the measures may be put in place long enough to ensure the benefits flow through," he said.
"They are, however, extraordinary measures which should not be in place for any longer than they unnecessary."
The premier returned from leave to introduce the legislation and steer it through the parliament.
NSW Minerals Council CEO Stephen Galilee said the bill was drafted hastily with virtually no consultation with coal companies likely to be affected by it.
"The bill is unnecessarily heavy-handed and ignores due process," he said on Wednesday.
The coal sector would nonetheless work constructively with the government to implement the bill, he said.
The Australian Workers' Union also criticised the legislation, saying it left industry exposed by failing to cap the price of coal for factories buying coal directly for operations.
AWU national secretary Daniel Walton said he was concerned thousands of workers in the steel, chemical and cement industries would be negatively affected by the changes.
The bill received broad support in the lower house and was supported by Labor, the Greens, One Nation and the Shooters, Fishers and Farmers in the upper house.
Upper house Greens MP Abigail Boyd sought to amend the bill, saying her party was uncomfortable compensating coal and gas companies.
The amendment, which would have ensured no power station operator could be compensated without having to pass on those financial benefits to the public, was voted down after being opposed by the government, Labor and One Nation.
Labor and the Greens attempted to use the extra sitting day to introduce rental relief bills, but both attempts were defeated.
