In the wake of the spirited bidding war over Pacific Hydro, Southern Hydro’s New Zealand owner, government-owned Meridian Energy, said on Friday it was considering a potential sale.

Pacific Hydro shares have risen from $3.16 in October, when a sale review process was announced, to Friday's close of $5.07, demonstrating the sector's attractiveness.

Southern Hydro was sold by the Victorian government for $391 million in 1997 and has changed hands several times since then. Meridian bought the company for $600 million in 2003 from US utility giant Alliant Energy.

Meridian said several companies – which it declined to name – had expressed interest in buying Southern Hydro. The NZ corporation has appointed Credit Suisse First Boston to "test the market" for selling.

Most energy companies with Victorian assets would be interested, but Origin Energy and AGL, which were reportedly outbid by Meridian bought Southern Hydro in 2003, were likely to be particularly interested.

Some analysts have suggested Spain's Acciona, which was outbid for pacific Hydro by IFM Renewable Energy, could also be interested. But Southern Hydro lacks Pacific Hydro’s exposure to international markets and Kyoto-compliant carbon trading regimes.

Southern Hydro has a large hydro-electric power generator in Victoria, which is used in times of high demand or during shutdowns at other power plants, as well as smaller hydro and wind power stations in NSW and South Australia.

These active assets have a total capacity of 737 megawatts, but there are also 580MW of new projects at various stages of development, including the 345MW Macarthur wind farm in South Australia.

Meridian's chief executive, Keith Turner, who serves as chairman of Southern Hydro, said a partial sale would also be considered. Southern Hydro is the NZ company’s lone Australian business and Meridian has no plans to remain in the country if it is sold.