Power in numbers: ag businesses seek energy price pain saviour

ACCC draft approval of joint tendering for gas, electricity contacts


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ACCC has issued a draft approval to a group of Victorian agribusinesses to jointly tender for gas and electricity supplies. The authorisation would allow other industrial energy users to join the group and dramatically increase the amount of jointly tendered energy.

ACCC has issued a draft approval to a group of Victorian agribusinesses to jointly tender for gas and electricity supplies. The authorisation would allow other industrial energy users to join the group and dramatically increase the amount of jointly tendered energy.

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Power hungry agribusinesses put differences aside to battle hostile market

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JOINING forces to tackle soaring energy prices, a group of Victorian agribusinesses are applying for approval to the competition watchdog, which is enthusiastically backing the initiative.  

In fact the Australian Competition and Consumer Commission (ACCC) likes the idea so much it will allow the group of Victorian meat processors and animal product companies to massively expand the joint tenders beyond their immediate energy needs.

Putting their market competition aside, the agribusinesses formed the Eastern Energy Buyers Group and applied to the ACCC to  run a joint tender processes for electricity, gas and gas transport. Members would pool their electricity and gas demands and place tenders in the market.

The group includes Ridley, Rivalea, Turi Foods, Australian Lamb Co., CSF Proteins, Diamond Valley Port, Gathercole Group, HW Greenham & Sons and Herd Pty Ltd.

The ACCC has issued a draft authorisation to the group for 11 years and is now seeking submissions.

ACCC chairman Rod Sims said joint tendering for industrial energy “is likely to deliver public benefits”.

The group told the ACCC energy costs threaten the future of their businesses. They expect crippling electricity prices to double in 2018 and fear the impost of an undersupplied, volatile domestic gas market.

Combining their energy demands would enable the buyers’ group to seek more competitive pricing and terms for supply and share the costs of contract negotiation and legal services, the ACCC said.

The group's’ current combined electricity demand is relatively modest, about 0.12 Terawatt hours or 0.27 per cent of Victorian electricity consumption. The combined gas demand is 1.2 Petajoules, or 0.75 per cent of Victorian gas consumption.

The authorisation would allow other industrial energy users to join the group and significantly increase the size of the joint tender, provided the combined annual energy consumption does not exceed 4.5 Terawatt hours of electricity and 16 Petajoules of gas.

In May, the ACCC granted an 11-year authorisation for a similar joint energy tender arrangement the to South Australian Chamber of Mines and Commerce, which represents about 16pc the state’s electricity load.

ACCC authorisation provides statutory protection for conduct that might otherwise trigger competition provisions of the Competition and Consumer Act. The ACCC must be satisfied the public benefit of the joint tender outweighs any public detriment.

“There will be minimal public detriment from the proposed conduct. EEBG’s members currently account for a relatively small proportion of total demand for both gas and electricity in Victoria”, Mr Sims said of the draft approval.

Visit the ACCC website for more information

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