United snuffs out Vector's Orion bid

By JAMES GARDINER

Auckland electricity lines company Vector has been outbid by arch-rival United Networks for Orion's North Island gas networks.

The networks - in Auckland, Wellington, Hawkes Bay, Manawatu and Horowhenua - have fetched $550 million, meaning a $200 million profit for Orion after just under seven years' ownership.

Orion, owned by the Christchurch, Selwyn and Banks Peninsula councils, first bought into what was Enerco Gas in 1993.

Although Vector itself has refused comment, the chairman of the trust that holds the Vector shares, Michael Barnett, issued a statement that indicated it did try to buy.

A furious Mr Barnett appeared to blame the "irresponsible" actions of others for sinking the bid. He said someone had leaked information, which led to last week's Herald story revealing the previously secret bid, and he referred to previous leaks of confidential information to three Auckland councils now engaged in a high-stakes legal battle with Vector and the Auckland Energy Consumer Trust.

Orion would not comment on whether there were other bidders but industry sources say Natural Gas Corporation was also keen and the second-highest bid was within about $5 million of United's.

Missing out may prove a blessing. The Government is looking closely at price controls on monopoly utilities, with an inquiry into electricity already under way.

That threat of regulation was one of the main reasons the Canterbury owners wanted out and the price - more than twice the current valuation - is a huge windfall to them.

Orion chairwoman Linda Constable said it was the right time to sell and she was extremely pleased with the price.

United Networks is New Zealand's largest owner of power lines, including the former Power New Zealand lines in North Shore, Waitakere, Thames Valley and Coromandel.

It is 79 per cent owned by UtiliCorp United of Kansas City, Missouri, so also had to obtain Overseas Investment Commission approval, although that has seldom stopped any foreign buyer.

The sale is now subject only to final approval from the United shareholders at a meeting next month. A company spokeswoman, Avon Adams, said: "We're confident we'll get it."

The other shareholders are Rodney, Waitakere and North Shore councils (a combined 10 per cent) and 22,000 individuals.

United has connections to 485,191 power consumers. The gas networks will give it 117,000 more, although about a quarter of those are already connected to its power lines.

In West Auckland and Wellington it will own both gas and power lines but the competition issues were cleared by the Commerce Commission before Christmas.

Ms Adams said both buyer and seller were delighted and United was confident it could get an adequate return on the investment.