The "return to basics", which was largely anticipated by industry commentators, opens the door for the big boys in power generation to swoop on the corporation's gas-fired stations - the 360MW Taranaki Combined Cycle plant at Stratford and its smaller cousin, the 118MW Southdown station in south Auckland, of which NGC owns 50%.
However, NGC is likely to retain its 50% stake in the 25MW Kapuni cogeneration plant as it is so closely linked to its nearby gas processing operations.
Commentators were picking the refocusing on core operations, following NGC's disastrous involvement in and subsequent withdrawal from the electricity retailing sector in 2001.
"What a surprise. That's where they should be, running a gas pipeline reticulation and distribution network, just like their Australian parent AGL," said one commentator today, referring to 66% NGC owner, Australia Gas Light Company.
NGC's decisions were one of the outcomes of a six-month review of the corporation's future business direction, said chief executive Phil James. Further details of the divestment program were expected to be made in the near future.
James said NGC no longer had the capability to service small customers. Following the recently established marketing alliance with Genesis Power, NGC no longer had a direct relationship with its retail gas customers, who received all customer support services from Genesis and were supplied with gas under the Genesis brand.
However, NGC was continuing with its larger commercial and industrial customers, who were outside the marketing alliance, as part of an increasing focus on business relationships at the wholesale level.
The Wellington-headquartered company, which owns and operates the North Island high-pressure reticulation network, last month said it was seeking Commerce Commission approval to buy the pipeline assets of UnitedNetworks, New Zealand's largest electricity and gas distributor.
James said there was considerable interest in NGC's generation assets. This followed a period of discussion with interested parties. "As we no longer have a natural hedge for our generation output, we have formed the view that these assets will be of greater value to those with a retail base."
The thermal power stations, together with the small (32MW) Cobb hydro station near Nelson, represented a combined total output of about 4000 gigawatt hours (GWh), or approximately 12% of total New Zealand demand.
James said these assets could produce better value outcomes for NGC if they were sold.
Commentators say fellow Southdown half-owner, Mighty River Power, should have pre-emptive rights to acquire the NGC stake in that south Auckland station. Any or all of Genesis Power, Contact Energy, Mighty River or even hydro king Meridian Energy could be interested in the TCC plant at Stratford.
Genesis Power chief executive Murray Jackson said from Auckland that his company could be interested in the TCC station. However, Genesis was also pressing ahead with its own proposed second gas-fired station at Huntly. He declined to comment on rumours that Genesis could defer the second Huntly station by buying the TCC plant.
"Our sights are now firmly on developing our position in the energy infrastructure sector, particularly in gas and LPG transportation and supply, and in energy metering. We will naturally continue to look at value creating and positioning opportunities for us in the energy industry for our assets," Jones concluded.
