Environmental reports lodged with Ms Keneally show the two state-owned power generators Macquarie and Delta want to greatly expand their output and are examining the option of both coal and gas power to achieve it.
However, the latest report from the Climate Group shows that NSW already has five of the top 10 polluting electricity plants in Australia. Total greenhouse emissions from the NSW plants rose to 67.3 million tonnes, up 1 per cent, mirroring the jump in electricity generation.
The Finance Minister, Joe Tripodi, said two weeks ago that applications for the generators' expansion were being lodged with the Department of Planning, saying they would allow for the gas-fired power stations on the sites of the existing coal generators.
"The Rees Government is preparing for the next generation of baseload power stations using more environmentally friendly gas-fired technology," he said.
"With the prospect of carbon pollution pricing, gas will become an increasingly attractive fuel source for future base-load generators."
Privately owned coal generators in Victoria are already saying they are under serious financial pressure because of the the Federal Government's carbon emissions trading scheme that plans to put a price on greenhouse pollution. Any future private buyers of the NSW generators are expected to be cautious about investing in the big carbon emitting coal plants.
Despite that, the documents lodged by the publicly owned NSW generators reveal they are examining the option of building more coal-fired power capacity.
In the US, new coal power plants are being blocked by local and state governments. Los Angeles is the latest city to announce that it will phase out coal-fired electricity by 2020.
The preliminary environment assessment lodged by the state-owned Macquarie Generation says proposes to expand its Bayswater-Liddell power plants in the Hunter Valley by about 40 per cent with "either coal or gas-fired generation".
Macquarie says "clean coal", known as carbon capture and storage, will not be ready in time for the expansion in 2014. As a result, it is looking at either a gas-fired plant or a more efficient coal plant, called an ultra supercritical plant, even though it would use more water and still produce significant greenhouse gases.
Delta Electricity says it will also examine coal and gas options to expand its Mount Piper power plant near Lithgow and overhaul its ageing Munmorah plant on the Central Coast.