$500m float plan for Vector

By CHRIS DANIELS, energy writer

Vector trustees have been sounded out over a plan for the Auckland power lines company to raise up to $500 million in a share float, the Herald has learned.

John Collinge, a director of Vector and its owner, Auckland Energy Consumer Trust, says the proposal is one of a number of privatisation ideas from the company.

Collinge, a veteran in the often cut-throat world of Auckland energy politics, said the trust chairman - and his former National Party colleague - Warren Kyd, had been bringing such "informal proposals" from Vector.

One of these would have reduced the trust's ownership to one third.

One idea was to pay $400 million to $500 million - or more if necessary - to buy out the interests of the Auckland City Council, the Manukau City Council and the Papakura District Council, which will get Vector's assets in 70 years.

A public float of shares would then help pay for it.

Collinge said he was "bemused" by some of the plans put forward by the company, plans that would take control out of the hands of the Auckland Energy Consumer Trust.

Vector is thought to be looking for new equity funding to pay for possible telecommunications plans and forays into Australia.

Collinge said Kyd was "hawking these proposals around".

"I think you can gather that he's very much in the sell-down mode," he said.

Collinge said he was not anti-business, and would look at every proposal on its merits.

But he had made an election promise that control of Vector should stay with the public.

He said he wanted to bring the public "up to date on what was going on".

Political intrigue and privatisation scaremongering are a defining feature of the Vector-AECT relationship.

No privatisation plans have succeeded and the current trustees are as divided as any of its predecessors.

The trust board appears to have a small majority opposed to any wholesale privatisation proposals.

Collinge's revelations come amid a flurry of activity among energy companies.

Vector said last week it was not interested in buying New Plymouth lines company Powerco, but it would not comment on its talks with listed gas pipelines company NGC.

NGC has been talking about a merger with Powerco.

NGC's 66 per cent owner AGL is widely tipped to be interested in buying a half share of Contact that is on the block.

Kyd, who chaired the parliamentary select committee for Max Bradford's electricity reforms and the Government's 1991 electricity pricing inquiry, said the trust was just "considering various possibilities" to do with Vector.

No decisions had been made and its members had different viewpoints.

"The company has indicated various things, and we're trying to think of what our attitudes might be should these things be put to us."

Another trust member, Shale Chambers, who represents the anti-privatisation group Powerlynk, said none of the options outlined by Collinge had been put to the trust.

Without proper direction from the trust about where its boundaries were, Vector's directors would naturally study all types of things.

It was the job of the trust, as owner, to set boundaries for Vector.

Collinge's role as a trust member and a director of Vector was a clear conflict of interest, said Chambers.

Vector chairman Michael Stiassny said the company "had no comment to make at this time".

Trust executive officer Gary Sturgess said that "it was unfortunate that a single trustee had chosen to air his private views on trust matters in the media".

Part of the trust's role was to consider all options on Vector's growth.

How it works

Vector is a monopoly power lines company, created when the lines side of Mercury's business was split from the electricity supply side. Before the creation of Mercury, the Auckland Electric Power Board covered both sides.

The Auckland Electricity Consumer Trust owns all the shares in Vector.

It is the largest publicly owned community trust in New Zealand.

Five trustees are elected to the trust every three years. The trust receives an annual dividend which it gives to 285,000 customers in Auckland City, Manukau and part of Papakura, through a credit on power bills. Last year's credit was $155.