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ACCC Approves Joint-Purchasing Group For SA Businesses

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.

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. Authorisation from the regulator will allow the them to attempt to secure reliable electricity supply arrangements for its members at competitive prices.

“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 claims that 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.

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