Gas bid waits for more details

By FIONA ROTHERHAM

A Commerce Commission decision on Natural Gas Corporation's $824 million bid for 75.8 per cent of TransAlta New Zealand has been delayed two weeks following concerns over gas dominance in the Hutt Valley.

Natural Gas Corp (NGC), 72 per cent owned by Australian Gas Light (AGL), sought the extension on its clearance application until March 17 in order to provide the commission with more information.

TransAlta supplies 26,000 gas retail customers in the Hutt Valley while AGL owns the pipeline in that area.

The Government forced the separation of electricity retail and lines businesses but has not followed suit for the much smaller gas industry.

When the application was first made, the commission identified national electricity retailing and gas distribution and retailing in the Hutt Valley as two key areas it would focus on.

Clearance can be given only if the commission is satisfied the deal does not result in or strengthen dominance in any markets.

If unsatisfied with dominance in one area, the commission has the ability under the Commerce Act to give clearance providing the applicant makes an undertaking to sell that particular asset.

Industrial gas users, who make up the bulk of gas consumers, are keen to see rationalisation of the industry providing it eventually brings end benefits to them such as cheaper prices.

There has been no evidence of that up to this stage in the electricity market, according to Grant Slade, chairman of the Industrial Gas Users Group.

"People feel they are getting ripped off yet they can't do anything about it unless they're in a position to bypass the supplier," he said.

Jim Lovatt, an energy sector consultant and former NGC employee, said the corporation had already been criticised for being a heavily vertically integrated organisation, involved in distribution, energy transmission and production.

"That offers an organisation the opportunity to indulge in practices, whether or not intentionally, that are anti-competitive," he said.

NGC shareholders were yesterday sent notices of the March 21 meeting to approve the TransAlta bid.

Details of the proposed rights issue to finance it will be sent out separately in a couple of weeks.

Meanwhile, NGC has been having informal talks with the Hutt Mana Energy Trust, which wants to remain a long-term investor in TransAlta.

Trust chairman Jeff Berkett said it was likely to accept dropping one of its two directors if the board was reduced overall from seven to six directors.