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Spain's Telefonica Internacional also placed a bid for the utility, which government officials are still considering.
The trouble is that low water charges mean inadequate income for the utility, which leads to poorly maintained infrastructure.
Aside from cost, towns must often battle the utility, which usually packs significant political and financial muscle.
Both Macquarie and Babcock plan to break up the utility, which has a nationwide network of gas and power lines, and generates electricity at five plants.
Southern Nevada, known by its acronym, S.N.W.A., said last month that it would make an offer for the utility, which has been struggling to cover debts.
The utility, which is based in Kansas City, Mo., said market conditions were prompting the company to reduce the size and scope of its business.
Similar(18)
The I.S.O.'s main backstop is the utilities, which call to pass on information about their systems.
The state could negotiate better prices than the utilities, which have amassed billions of dollars in debt, it is believed.
The threat of higher interest rates was hard on bank and other financial stocks, which dropped 2.9percentt, and on the utilities, which fell 2.3percentt.
To get the fund up and running quickly, the state regulators turned to the utilities, which had been administering their own, smaller funds for decades.
The utilities, which were big contributors to the governor's 1998 campaign, say he has been slow to react to a crisis he was warned about months ago.
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