ACCC gives all clear to group for energy price bargaining

Three new players join the buying group for power in South Australia.

Grains producer Viterra and malt producer, Cargill Malt Asia Pacific, have joined a 27-member group that has been given the official all-clear by the competition regulator to bargain as one entity with power generators for better electricity prices, according to a report by the AFR.

This group which includes OZ Minerals, steelmaker Arrium, ASX-listed packaging group Orora and cement maker Adelaide Brighton which contributes up to 16 per cent of the electricity demand in South Australia, which has seen rising energy prices recently.

The AFR report mentioned that the Australian Competition and Consumer Commission (ACCC) chairman Rod Sims said earlier this week, that if more businesses wanted to join then they would need to make a fresh approach to theACCC, as he predicted it would have a significant impact on the energy market in South Australia.

The three extra businesses had joined the 24-member buying group since the ACCC made an initial draft determination in mid-April, and that had expanded the total load across the buying group from 245mW to 269mW. But if others wanted to join up to increase that clout further, then the ACCC would need to ratify that. “They’d have to come back and ask us,” Sims was quoted as saying.

Viterra, Cargill Malt and Adchem Australia are the three new members of the buying group which has been spearheaded by the South Australian Chamber of Mines and Energy. AGL Energy, the largest electricity supplier in South Australia has declined to comment on ACCC’s decision. A spokesman for Origin Energy said it was a “unique arrangement that we’ll examine with interest”.

Mr Sims said the scale of the combined energy load across the 27 businesses would give them extra leverage in bargaining on the retail supply of energy contracts. “This is terrific for competition,” he said.

Premier of SA, Jay Weatherill, had announced a $550 million energy package in mid-March designed to try and stabilise the state’s electricity market and lower electricity prices. The Weatherill government’s energy package includes a taxpayer-owned $360 million fast-start gas-fired power generator which will only be turned on when demand exceeds supply.