NSW is unlikely to use new emergency powers to ensure energy supply in the state amid improving conditions in the under-strain system, Treasurer Matt Kean says.
A lack of capacity, as well as power plant maintenance, have stretched NSW energy supplies this week, with Mr Kean urging residents on Wednesday to reduce usage, stoking fears of power shortages.
The Australian Energy Market Operator this week for the first time took control of directing supplies from energy generators to the east coast grid until further notice.
The crisis prompted the government to hand Mr Kean more power to intervene in the market to shore up energy supplies, enabling him to force coal companies to supply generators with fuel.
Mr Kean said on Friday he received "very good news" from AEMO in morning discussions that conditions in the state's power system were much better.
He said more generators had come online, including one that had added 680 megawatts to the system. Another generator would come online on Saturday, further bolstering reserve capacity.
"AEMO have described the energy situation as much healthier," he told reporters in Sydney.
The new powers would remain on stand-by if there was an unexpected change to the situation, including issues with fuel security or logistical problems getting fuel to the site of generators.
"We want to make sure we've got everything in our tool kit to keep the system running and get through this period," he said.
Earlier, NSW Premier Dominic Perrottet described the special powers given to Mr Kean as precautionary.
"These aren't new approaches, we've done that in the past and the advice we have at the moment is that ... he can direct if he needs to," Mr Perrottet said in Canberra.
The latest advice to the government was that the state's power system is stable and should improve through Friday.
Late on Thursday the AEMO said coordination with the NSW government and generators had markedly improved reserve levels.
Asked about Canberra's role in solving the crisis, Mr Perrottet said each state faced energy challenges but the federal government should coordinate responses nationally.
"The national cabinet certainly has a role to play," he said, ahead of the meeting of state and territory leaders in Canberra on Friday.
Pressure on the grid is expected to ease from Friday and through the weekend, as more power units come back online.
Federal Energy Minister Chris Bowen has said AEMO's decision to take control of the market was the best option for households.
