The NSW government is planning to sell the first of the state's electricity distributors as soon as it can – if it receives electoral support at the March state election, and has already begun work to prepare for the sale before the vote.
The first asset to be sold will be the high-voltage network company Transgrid, which will be fully privatised. It will be followed by the sale of half the shares in the two largest electricity distributors, Ausgrid and Endeavour Energy, with estimates the government could raise as much as $15 billion from these three sales.
The Baird government has outlined plans to sell 51 per cent of the remaining state-owned electricity assets after earlier selling the power generators, with all funds raised to be spent on infrastructure.
In return for selling off Transgrid, the government has said the rural distributor Essential Energy will be kept in government hands after a party-room revolt by the National Party, which was concerned that the sale of this asset could prove to be politically unpopular in regional areas.
The proposed asset sales will mean that most NSW households will be serviced by private-sector owners since Ausgrid and Endeavour supply power to Sydney, Wollongong and Newcastle, which are the state's main population centres.
The government has conceded a price review under way by the Australian Energy Regulator will hit revenues and profits of the network businesses, which will also affect their sale price.
"Because of the determination of the regulator we will see a loss of revenue and dividends," NSW Treasurer Andrew Constance said on Thursday.
The assets will be sold through so-called trade sales to private investors, although the government intends to retain the option of privatising Ausgrid and Endeavour via the sharemarket as it seeks to maximise the sale proceeds.
NSW wants to sell its electricity network businesses at the same time as Queensland has flagged it intends also to go down the same path, leading to caution that the glut of assets may be difficult for the market to absorb and may limit the prices offered.
"These businesses are highly inefficient," Mr Constance said, pointing out that between 1996 and 2012, transmission charges in Victoria declined by 18 per cent and rose 122 per cent in NSW.
"Government shouldn't be running these things," he said. "NSW consumers have been ripped off. The unions have run amok."
A scoping study for the government by investment banks UBS and Deutsche Bank has found that a range of institutional and other investors who are looking for guaranteed sources of income would be interested in acquiring the assets.
"We will commence technical advice work immediately," Mr Constance said of the planned asset sales, "We will ensure we are ready to go" if the privatisation is backed by the electorate.
Greens MLC John Kaye warned that the rising use of renewable energy such as solar and wind will limit how much investors will pay for the assets to be sold, at a time when energy demand is declining.
"This [scoping] study could have been written 15 years ago, when network businesses faced a much more certain future," Mr Kaye said.
NSW Opposition leader John Robertson said the electricity businesses return profits to the state budget to help fund government spending.
"Under the Liberals privatisation plans this money will go to the private owners and we will lose more than a billion dollars from our budget each year," he said.
