"AGL and other power station operators should be installing Flue Gas Desufurisation [wet scrubbers] for the SO2, as is required in most countries around the world," Ms Rivers said.

Nearby, Muswellbrook "really stands out as being the worst" in NSW for SO2 readings, said Ben Ewald, a senior lecturer in epidemiology at the University of Newcastle.

"As a gas, it can cause asthma exacerbation, and as a particle it can cause more serious disease," Dr Ewald said.

He pointed to research from the US in 2016 that identified links between small particulate pollution caused by burning fossil fuels, particularly coal, and increased mortality from heart disease.

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Fairfax Media understands Bayswater's outsized sulphur emissions reflect its reliance on relatively poor quality fuel from Peabody Energy's Wilpinjong coalmine.

"The Bayswater upgrade will increase capacity without increasing air emissions, which are already within limits set by the NSW Environment Protection Authority," an AGL spokesman said.

"The project involves the replacement and upgrade of the turbines on the four Bayswater generating units, increasing the capacity of each generating unit by 25 megawatts (MW) to 685 MW," he said. "No other changes are proposed."

A spokeswoman for the EPA said "the proposed upgrade will be assessed by the NSW Department of Planning and Environment", with the agency advising the government.

The Berejiklian government, though, appears unlikely to throw up road blocks.

A spokesman for Planning Minister Anthony Roberts told Fairfax Media the upgrade of Bayswater was one of two projects recently declared to be "critical for NSW and its energy security and reliability".

The other critical project is Snowy 2.0, the Turnbull government's plan to add pumped storage capacity to the Snowy Hydro scheme. The project costs could exceed $4 billion and will require NSW approval for upgraded transmission lines and construction work in a national park.

"Both projects are considered essential for the state but still require detailed community consultation and comprehensive environmental assessment like any other major project," the spokesman said.

Dr Ewald said AGL staff told a public gathering in Muswellbrook last March that the plant had two ways of responding when pollution monitors showed high SO2 readings.

One was to increase oxygen levels in the furnaces to dilute the emissions but not actually change the amount of pollution going up the smokestack.

The other was to source low-sulphur coal from a special bunker at the plant.

"Why can't they use [the cleaner coal] all the time?" Dr Ewald said.

The EPA launched an investigation into NSW power plants last May after Fairfax Media reported claims from that March meeting that Bayswater was deliberately blending fuels to mask pollution.

With only one of its four units monitored, staff diverted better quality coal to that furnace, the meeting heard.

"The EPA is currently finalising its review," the agency spokeswoman said on Friday, adding that an initial finding suggested coal blending had not taken place at the state's power plants.