The Australian Competition and Consumer Commission has authorised the South Australian Chamber of Mines and Energy, along with 27 other South Australian businesses, to establish a joint electricity purchasing group for 11 years.
Authorisation will allow the joint buying group to attempt to secure reliable electricity supply arrangements for its members at competitive prices. Together, the group’s total load of 269 MW accounts for around 16 per cent of electricity demand in South Australia and less than one per cent of the National Electricity Market.
“Three more companies have joined the buying group since the ACCC made its draft determination in April, increasing the total load from 245MW to 269MW. This strengthens the benefits of the conduct,” ACCC Chairman Rod Sims said.
“The greater combined load increases the group’s bargaining power in the retail supply of energy contracts in South Australia, which will be good for competition in a market which is highly concentrated at times on the supply side,” Mr Sims said.
“This joint tender has the potential to change wholesale market dynamics by allowing generators to use existing plants more efficiently, or encouraging new entrants into South Australian electricity generation. This could bring the benefits of increased competition in the wholesale market for electricity,” Mr Sims said.
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 the proportion of total market demand represented by the group,” Mr Sims said.
Background
SACOME is the peak industry body representing companies with interests in the South Australian minerals, energy, extractive, and oil and gas sectors, including those who provide services to these companies.
Three additional businesses, Adchem (Australia) Pty Ltd, Cargill Malt Asia Pacific Pty Ltd, and Viterra Operations Pty Ltd have joined the bargaining group.
The other members 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 and 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 ACCC issued a draft determination proposing to grant authorisation, on 13 April 2017. Interim authorisation was also granted at this time, allowing the parties to commence a joint tender for the supply of electricity immediately.
Authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010. Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit resulting from the conduct outweighs any public detriment. Authorisation is sought as the proposed conduct may contain a cartel provision or may have the purpose or effect of substantially lessening competition or be an exclusionary provision within the meaning of section 45 of the Act.
Further information about the applications for authorisation is available on the ACCC Authorisations Register.