A draft determination proposing to allow the establishment of a joint electricity purchasing group in South Australia has been issued by the Australian Competition and Consumer Commission (ACCC).
The draft determination proposes to allow the South Australian Chamber of Mines and Energy, along with 24 other South Australian businesses, to establish a joint electricity purchasing group. The ACCC proposes to grant authorisation for 11 years.The ACCC has also granted interim authorisation to allow the parties to commence a joint tender for the supply of electricity immediately.
The 24 members of the bargaining group are Adelaide Brighton Cement Ltd, Arrium Limited, Brickworks Building Products, Central Irrigation Trust, Flinders University, Hillgrove Resources, IGA Distribution (SA) Pty Ltd, Impeach Pty Ltd, Intercast & Forge Pty Ltd, Mardina Pty Ltd, Nyrstar Port Pirie Ltd, OZ Minerals Limited, Orora Limited, Pernod Ricard Winemakers Pty Ltd, Rex Minerals (SA) Pty Ltd, SMR Automotive, Seeley International, Shahin Brothers Pty Ltd, Shahin Enterprises Pty Ltd, Shahin Holdings Pty Ltd, Shahin Properties Pty Ltd, The Bend Motorsport Park Pty Ltd, Thomas Foods International, University of South Australia.
The joint buying group wants to secure reliable electricity supply arrangements for its members at competitive prices. Between them the group accounts for around 15 per cent of electricity demand in South Australia.
“While the outcome of the tender process is uncertain, the proposed conduct, by offering a guaranteed reasonably sized load for up to ten years, has a real chance of changing the wholesale market dynamics, where it allows existing participants to use existing plant more efficiently, or allowing new entry of electricity generation into South Australia,” ACCC Chairman Rod Sims said.
“This could bring the benefits of increased competition in the wholesale market for electricity.
“Given the high levels of concentration on the supply side of the market in South Australia, the tender may provide further competition benefits by combining demand and increasing the participants’ bargaining power in the retail supply of energy contracts.
The ACCC also considered the transaction cost savings likely to result from the tender provided a further source of public benefit.
“The ACCC considers there will be minimal public detriment from the proposed conduct, given that the group accounts for a relatively small proportion of total market demand,” Mr Sims said.
The ACCC is seeking submissions on its draft determination before making a final decision, which is expected in June.