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Australia regulator may let companies collectively bargain for electricity
April 13, 2017 / 1:11 AM / 5 months ago

Australia regulator may let companies collectively bargain for electricity

SYDNEY, April 13 (Reuters) - Australia’s antitrust regulator said it plans to let two dozen companies in the state of South Australia bargain collectively for electricity purchasing contracts, saying the move would guarantee supply and improve competition.

The country’s fifth biggest state, which is heavily dependent on wind and solar energy, was crippled by several power outages last year after heavy winds knocked out an interstate power connector and cut electricity to residents and industry.

The Federal energy minister has since described the state’s energy supply as a “basket case” and companies from renewable energy battery maker Tesla Inc to software maker Atlassian Corp Plc have asked to step in to devise a solution.

A “buying group” of 24 miners, winemakers, grocery stores, universities and other companies representing about a sixth of the state’s energy consumption has meanwhile said it wants to bargain collectively for power contracts to bring down prices that have been criticised as too high.

On Thursday, the Australian Competition and Consumer Commission (ACCC) said it had made a draft determination to waive anti-cartel laws and allow the companies to bargain collectively for 11 years.

“The proposed conduct ... has a real chance of changing the wholesale market dynamics, where it allows existing participants to use existing plant more efficiently, or allowing new entry of electricity generation into South Australia,” ACCC Chairman Rod Sims said in a statement.

“The tender may provide further competition benefits by combining demand and increasing the participants’ bargaining power in the retail supply of energy contracts.”

The South Australian Chamber of Mines and Energy (SACOME), which applied for the exemption on behalf of the 24 companies, said the draft ruling “means we can now go out and talk to electricity suppliers about options to take the pressure off some of the most important businesses in this state”.

SACOME said it expects the regulator to give its final decision in June.

Reporting by Byron Kaye; Editing by Joseph Radford

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