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Eastern states processors join forces to cut gas and electricity costs

by Sheep Central, 13 October 2017
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EASTERN states sheep meat, beef, pork and poultry processors have won competition regulator approval to join forces to tender for cheaper electricity and gas.

The Australian Competition and Consumer Commission has issued a draft determination proposing to allow businesses in the new Eastern Energy Buyers Group to run joint tender processes for electricity and gas.

The EEBG’s members have significant operations in Victoria and some operations interstate in agriculture and are industrial energy users, the ACCC said. They include the Colac and Melbourne-based Australian Lamb Co; Laverton North renderer CSF Proteins Pty Ltd and pork processor Diamond Valley Pork; Victorian beef, sheep and pork processor the Gathercole Group; Tongala beef processor HW Greenham and Sons; Geelong beef and lamb processor MC Herd; animal nutrition manufacturer Ridley AgriProducts, New South Wales pork processor Rivalea (Australia) Pty Ltd, and Tomastown poultry and cheese processor Turi Foods and its farming division.

The ACCC said the proposed joint tender process would cover supply for electricity, gas and gas transport services to members of the group.

The authorisation would also allow other industrial energy users to join the group, provided the combined annual energy consumption does not exceed 16 Petajoules of gas or 4.5 Terawatt hours of electricity, which is around 10 per cent of Victorian consumption.

ACCC chairman Rod Sims said the commission considers that the joint tendering process is likely to result in public benefits.

“It would enable the group to seek more competitive pricing and terms through combining their gas and electricity demands.”

Aggregating the groups’ demand and jointly tendering for long term contracts may also provide incentives for investment in new generation, such as a small-scale power purchase agreement where EEBG would commit to acquiring the generator’s capacity up front, the ACCC said.

Joint tendering is also likely to help EEBG group members jointly share costs for services such as negotiating and legal services.

“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.

On September 1, 2017, the ACCC granted interim authorisation to allow the group to commence the tender process on the basis that the group would not enter into a supply agreement with the successful tenderer(s) unless or until the ACCC makes a final decision granting authorisation.

The ACCC proposes to grant authorisation for 11 years.

The ACCC is seeking submissions on its draft determination before making a final decision.

ACCC 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.

The ACCC said it 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.

Further information about the application for authorisation is available on the ACCC’s public register.

 

Reader's Comments


Comment
  • Riverina Oils and Bio Energy October 16, 2017

    Good day,

    Was just reading the article and would be interested in knowing more about this joint tender process.

    We have a manufacturing plant located in Wagga Wagga, NSW and are a fairly big user of electricity and gas.

    Would you be able to let us know what further steps are required to be part of this tender?

    Thanks and regards,

    Alex

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