A new briefing paper critical of the Baird government's proposed privatisation of state-owned electricity businesses notes that in 2012 NSW Treasury changed the rules for how the companies' assets are valued.

The change increased the valuation of the assets and lowered reported levels of profitability, according to the paper by Bob Walker, emeritus professor at the University of Sydney School of Business and former Treasury official Dr Betty Con Walker.

As a result, for one company, Ausgrid, the reported return on equity – a key measure of profitability – fell from 23.2 per cent in 2012-13 to 14.1 per cent in 2013-14.

Another company, Endeavour Energy, saw its return on equity drop from 20.2 per cent to 18.2 per cent in the same period.

The NSW government has promised to offer 50.4 per cent of each of the businesses for long-term lease to the private sector if it is re-elected next month.

The paper says it can be "safely concluded" this was done "to disguise trends in the profitability of the state-owned network agencies".

Professor Walker noted that only five years before, in 2007, Treasury had said this valuation method was "totally inappropriate" for specialised public sector assets and noted at the time of this "major switch", Premier Mike Baird was Treasurer.

He told Fairfax Media the government was "preparing the ground for privatisation".

"If people realised how profitable these businesses were, marketing the idea that we'll sell off these surplus assets to invest in non-income earning roads is absurd," Professor Walker said.

Prospective private sector purchasers, however, would easily see the underlying profitability of the businesses, Professor Walker said.

"The private sector has smart people who can spend the time and look through these financial statements," he said.

However, in a statement, a spokeswoman for NSW Treasury said: "Professor Walker's assertion is wrong".

"As early as 2010, Treasury was aware of issues being raised about the most appropriate method to value non-current assets and that the Australian Accounting Standards Board was proposing to issue a new accounting standard," she said.

She said Treasury's assessment was that "the new standard and supporting guidance made stronger arguments" to support its introduction than had previously been the case.

But Professor Walker disagreed, saying: "If anything, the new standard was even stronger in saying the approach recently used was inappropriate".

Elsewhere, the briefing paper says it is "grossly misleading" of the government to imply that selling 49 per cent of the electricity assets meant the state would retain ownership.

In reality, control of Ausgrid, Endeavour Energy and Transgrid – of which 100 per cent is proposed for lease – would be transferred to private owners.

It also argues the Baird government could borrow to fund its $20 billion of infrastructure promises earmarked from the transaction because of the "minuscule" level of net debt.

"Adding an average $2 billion per annum borrowings would mean that the state's debt levels would continue to be manageable," it says.