ACCC allows agribusinesses to jointly purchase energy

22 November 2017

The ACCC is allowing businesses in the new Eastern Energy Buyers Group (EEBG) to establish a joint energy purchasing group and run joint tender processes for electricity and gas for 11 years. 

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 10 per cent of Victorian consumption.

“Joint purchasing of electricity and gas will generate efficiencies compared to each member of the purchasing group sourcing energy separately,” ACCC Chairman Rod Sims said.

“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.”

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 jointly 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.

Further information about the application for authorisation is available on the ACCC's public register: The Eastern Energy Buyers Group - Authorisations - A91594 & A91595.

Background

The current members of the EEBG are: Australian Lamb Company Pty Ltd; Australian Lamb (Colac) Pty Ltd; CSF Proteins Proprietary Ltd; Diamond Valley Port Pty Ltd; the Gathercole Group; HW Greenham & Sons Pty Ltd; M.C. Herd Pty Ltd; Ridley Agriproducts Pty Ltd; Rivalea (Australia) Pty Ltd; Turi Foods Pty Ltd; and Turi Foods Farming Division Pty Ltd.

The ACCC granted interim authorisation in September 2017 to enable EEBG to investigate their options and issue tenders while the ACCC considered the substantive application.  The ACCC also issued a draft determination proposing to allow the conduct in October 2017.

This is the second energy buying group the ACCC has authorised this year. The ACCC authorised the South Australian Chamber of Mines and Energy, along with 27 other South Australian businesses, to establish a joint electricity purchasing group in May 2017.

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.

Release number: 
MR 216/17
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