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NGC/Meridian Reach Agreement on Customer Sale

29 June 2001

NEWS MEDIA RELEASE

NGC/Meridian Reach Agreement on Customer Sale

Natural Gas Corporation Holdings Limited (NGC) announced today it has reached an agreement to sell the South Island electricity customer base of its retail business, On energy, to Meridian Energy.

NGC Managing Director, Mr John Barton, said the agreement was subject to a number of usual conditions, including the completion by Meridian of due diligence and the finalisation of arrangements for NGC to provide transitional call centre, billing and credit services for customers.

Mr Barton advised that it was not possible to determine the final value of the transaction as this depended on a number of adjustments to be made in the period to October 2001. However, he confirmed that the transaction was one of the elements taken into account in the expected abnormal losses announced by the Company last week.

Subject to finalisation of the agreement, Mr Barton said completion was expected by 9 July 2001. The agreement provides for Meridian to have effective ownership of On energy’s South Island residential and business customers from 11 June 2001. Nearly all of these customers are located in Christchurch, although there is a small number in Dunedin.

Mr Barton said details of the transfer of customers were being worked through with Meridian as part of the process of finalising the sale. Both companies are committed to ensuring a smooth transfer of the customer base. Customers will be kept fully informed and are not required to take any action. Until further notice, inquiries by On energy customers in the South Island will continue to be handled by the On energy call centre.

He said the sale of the South Island customer base was part of a range of initiatives being taken by NGC to significantly reduce the effects of high wholesale electricity prices, which had reached unprecedented levels during June.

Mr Barton concluded by saying NGC was continuing to progress discussions with a number of parties to further reduce its exposure to the wholesale electricity market.

ENDS

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