Businesses in the new Eastern Energy Buyers Group (EEBG) will be allowed to jointly purchase electricity and gas for eleven years under a new decision made by the Australian Competition and Consumer Commission (ACCC).
EEBG’s current members are industrial energy users who operate in the agriculture industry. Members have significant operations in Victoria and some operations interstate.
The proposed joint tender process would cover supply of electricity, gas and gas transport services to members of the group.
Other industrial energy users may join the group, provided the combined annual energy consumption does not exceed 16 Petajoules of gas or 4.5 Terawatt hours of electricity. This is equivalent to around ten per cent of Victorian consumption.
ACCC Chairman, Rod Sims, said the joint purchasing of electricity and gas will generate efficiencies compared to each member of the purchasing group sourcing energy separately.
“This joint tendering process is likely to result in public benefits as the group should be able to seek gas and electricity at a more competitive price,” Mr Sims said.
Aggregating the groups’ demand and jointly tendering for long-term contracts may also provide incentives for investment in new generation.
This could include a small-scale power purchase agreement where EEBG would commit to acquiring the generator’s capacity up-front.
The ACCC also considered the joint sharing of costs likely to result from the tender provided a further source of public benefit.
“There will be minimal public detriment from the proposed conduct. EEBG’s members currently account for a relatively small proportion for both total gas and electricity demand in Victoria,” Mr Sims said.