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Power in Numbers

On 13 April 2017, the Australian Competition and Consumer Commission (ACCC) granted an interim determination to the South Australian Chamber of Mines and Energy (SACOME) to allow a group of 24 of South Australia’s major mining, university, property investment, manufacturing and food sector companies to establish a joint electricity purchasing group.

In January, headed by SACOME, 24 of South Australia’s major companies which include Adelaide Brighton Cement, the Shahin Group, Thomas Food, Flinders University, Nystar Port Pirie, OzMinerals and Arrium Limited applied to the ACCC for an authorisation enabling them to engage in what may otherwise be a breach of the cartel provisions and amount to a substantial lessening of competition in the market under the Competition and Consumer Act. The group sought authorisation to:

  • Collectively investigate potential electricity supply options for the group’s combined electricity loads;
  • Collectively conduct a tender process for the supply of the group’s combined electricity loads;
  • Jointly negotiated an electricity supply contract to enable the group to access the same price and terms and conditions as each other;
  • To individually enter into an electricity supply agreement on the same terms and conditions as the other group members; and
  • To make joint decisions concerning the administration and operation of certain aspects of the group’s electricity supply agreements.

On 13 April, the ACCC granted an interim determination to SACOME which allows the group to immediately:

  • Investigate potential electricity supply options for the group’s combined electricity loads;
  • Conduct a tender process for the supply of the group’s combined electricity loads; and
  • Negotiate an overarching electricity supply contract to enable the group to gain access to price and terms and conditions offered to other members of the group.

The interim determination remains in place authorising the conduct until the ACCC grants a final authorisation. The authorisation, if granted, will be effective for a period of 11 years.

Whilst this is not the first determination of this type in Australia, in March last year the ACCC granted a similar authorisation to the Melbourne City Council and others allowing them to jointly tender and contract electricity for a period of 15 years, it is a significant shift in South Australia which is aimed at encouraging competition within the wholesale market to increase reliability and drive energy prices down in South Australia.

The interim determination is in place while the ACCC considers submissions in response.

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