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One-stop-shop utility plan left high and dry with water access barred

By Michele Simpson

Friday 22nd September 2000

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RICHARD BENTLEY: Significant opportunities
The country's largest energy retailer, Natural Gas Corporation, is investigating a one-stop shop for utilities but cannot get its plans flowing because of local authorities' tight control of water supply.

A 72% shareholder in Stock Exchange-listed NGC, Australian Gas Light finalised its plans this week for a multi-utility company across the Tasman in a joint venture called AGL-Actew.

Actew is the water and electricity business of ACT's local government.

The concept is believed to be the first Australasian multi-utility and first government-private multi-utility that combines a full range of energy, water and telecommunications services to lock in customers.

AGL said it would look at opportunities to replicate its ACT multi-utility venture here in New Zealand.

NGC chief executive Richard Bentley said it was inevitable that water and wastewater would become more commercial.

"There is massive investment required just in water quality alone. City Councils can't just keep writing huge cheques," he said.

Mr Bentley said it was not about companies investigating ownership plans - purely management of water in what was currently controlled tightly by local government.

"We think that there are significant opportunities for the local government sector to do better and work with the private sector but at the moment there is not a lot of progress."

AGL spokesman Bill McLaughlin said there was no commitment yet to set up a multi-utility in New Zealand as the Australian venture had been up and running for only three weeks.

He said the venture had taken six to nine months to set up. It had benefits of combining call centres and centralised billing.

Australian analysts expected AGL to develop products in ACT and replicate the "multi-utility" or parts of the model in parts of Australia as well as New Zealand.

But in New Zealand there were not the same opportunities to buy or manage utilities included in the joint-venture in Australia.

The lid may be on water here but there were opportunities in telecommunications, Mr Bentley said. "You've got fragmented line companies run by trusts and there is a lot of potential."

But NGC currently had its "hands full" with electricity and gas ventures here and saw more opportunities in its core market, Mr Bentley said.

NGC spent $824 million this year buying Canada's TransAlta Corp's 76% stake in TransAlta. The company also owns the electricity retailing business of Waikato-based Wel Energy Group as well as Propane Gas LPG, a 60.25% stake in LPG distributor Liquigas and 50% in Kapuni gas reserves.

The NGC share price finished at $1.43 on Wednesday after peaking at nearly $1.70 in the past eight months.

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