Former NSW Treasurer Michael Egan has described a Deloitte Access report that promised an economic bonanza from leasing the state's electricity networks as "drivel."

The ALP stalwart and the state's longest serving treasurer said at a parliamentary inquiry into NSW premier Mike Baird's plan to lease 49 percent of the state's power networks that he backed the transaction itself.

But he also criticised Mr Baird for massively exaggerating the windfall to the budget and said it was not "prudent" for Mr Baird to spend the entire $13 billion from the lease on non-income earning infrastructure projects such as railways, town water supplies and roads.

He said the Deloitte Access report, commissioned and released by Mr Baird before the state election, which promised a $300 billion boost to the state's economy from building such infrastructure was "drivel"

"They gathered all their data and put it through a Thermomix," Mr Egan said. "It should be given to first year economics students so that they have something easy to tear apart."

Thermomix is a luxury kitchen appliance.

Incorporating the Deloitte modelling was one of the key changes that UBS analysts were told to make to a controversial research report about the electricity sale on the eve of the state elections. The inquiry is looking at whether UBS, which has a multi-million contract to advise on the lease deal, changed the independent report under pressure from Mr Baird's office.  The independent analysts were told by UBS superiors that t initial report was too negative about the impact on the state budget of the lease and they should balance this by including the Deloitte report, the inquiry was told.

Mr Egan said Deloitte ignored the likelihood that many of the economic benefits from infrastructure would leak offshore or to other states and also ignored the risk that many of the projects would be duds.

He said for example that he thought a planned $2 billion light rail line from the Sydney CBD to the eastern suburbs would be a disaster.

He said replacing an income-earning asset like the electricity networks with non-income-earning assets would drive up the state's debt-to-revenue ratiosm which could be risky once interest rates and debt servicing costs rose.

Mr Egan said the benefit to the budget from leasing the "poles and wires" would be a "fraction" of $13 billion, perhaps only $2 billion.

He said booking the full amount as a windfall to the budget failed to take account of the loss of dividends from the network firms.

He said the actual benefit to the state budget would be the difference between the sale price and the "retention value," which is the net present value of the future dividend stream. He said otherwise Mr Baird had invented a "magic pudding."

He said that he still backed the lease transaction itself even though it was opposed by his ALP colleagues.

Mr Egan said it would bring a "marginal" financial benefit to the government and there was no longer any need to keep the networks in public ownership. He said ALP claims that prices would rise faster after privatisation were "nonsense."

Mr Egan led a push to privatize the state's electricity networks in the late 90s which was blocked by trade unionists.Mr Egan said unions saw government owners as a "soft touch" in wage negotiations.