Transpower has been lined up by officials to play a major part in the Government's $1.5 billion ultrafast broadband roll-out by providing "backhaul" links between the 33 regions where fibre will be laid.
Papers released under the Official Information Act indicate the state-owned grid operator has shown "great interest".
The Economic Development Ministry warns local fibre companies established as a result of the scheme would not have the right to use 23,500 kilometres of fibre owned by Telecom. That is because regulated access to the fibre is restricted to communications traffic that originates on Telecom's copper network.
Transpower owns 900km of fibre cable and leases about another 9000km from Telecom, TelstraClear, Vector and FX Networks.
It could provide an alternative means of connecting fibre networks, especially if electricity lines companies took a lead role in the ultrafast broadband scheme. Officials said substations were then likely to be "ideal locations for interconnection".
The ministry sought permission from Communications Minister Steven Joyce in July to hold talks with Transpower to discuss whether it might expand its own network.
"In our various conversations with Transpower we have encouraged it to participate in the Government's broadband investment initiative," officials said. "Transpower has also shown great interest in the investment initiative and has sought to meet with you as Minister of Communications to discuss opportunities to participate."
Joyce says officials are considering what role Transpower could have as part of wider consultations on facilitating the deployment of broadband infrastructure. "Officials will discuss this issue with Transpower after receiving its submission."
A Transpower spokeswoman confirmed it had discussions with Joyce, but was guarded.
"It is recognised that there are limited opportunities available, with a number of legal, economic and technical constraints to be considered with the deployment of fibre on both new and existing transmission lines."
Transpower would need new consents from landowners to use its existing overhead fibre for purposes other than supporting electricity distribution, officials said.
Officials have considered a law change that would force Telecom and others to make their "dark fibre" and poles and ducts available to local fibre companies. They described that as "highly contentious" and warned it might send the wrong signals to investors in the scheme.
Joyce would not comment directly on whether such changes were still under consideration, or were off the agenda. "The desirability of any regulation in relation to fibre access and support structures will be considered by officials in the development of policy advice to me after submissions close for the consultation on facilitating the deployment of broadband infrastructure," he says.
Thirty-eight organisations, including local utilities, Telecom and overseas firms, have signalled they may submit proposals in January to invest alongside Crown Fibre Holdings in local fibre companies. The Government hopes these will lay fibre to three-quarters of homes within 10 years.
Ministers will get the final say on who will partner with Crown Fibre Holdings but won't micro-manage the project, under a formula proposed by officials.
The Government will use the "major transactions" provisions of the Companies Act to control big decisions made by the Crown-owned company — those that involve more than half of its assets.
The Economic Development Ministry warned it could otherwise be difficult for ministers to keep their hands on the tiller, without inviting accusations of "political interference" or putting the Government at risk of being sued if the initiative went wrong.
Ministry officials said the major transactions provision in the Companies Act could ensure ministers were involved in the "key decision of whether to engage with a national or series of regional providers", while avoiding involvement in small decisions.
"If ministers were to have more substantial involvement in investment decision-making this would be an exceptional role," they said, which "could expose the Crown to significant liability, and may invite litigation".