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SA companies allowed to buy power in bulk

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The Australian Competition and Consumer Commission will allow a group of South Australia's biggest electricity users to buy power together to cut costs and ensure stability of supply.

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The group, headed by the South Australian Chamber of Mines and Energy and including such companies as Oz Minerals, Arrium, Nyrstar and Thomas Foods, represents about 14 per cent of SA’s electricity consumption.

In a draft determination on Thursday, the ACCC says it will allow the group to issue a joint tender for power and believes the move could result in more competitive wholesale electricity prices.

“While the outcome of the tender process is uncertain, the proposed conduct, by offering a guaranteed reasonably sized load for up to 10 years, has a real chance of changing the wholesale market dynamics,” ACCC chairman Rod Sims said.

Sims said the proposal allowed power companies to use existing plants more efficiently and also allowed for new generation in SA.

“This could bring the benefits of increased competition in the wholesale market for electricity,” he said.

SACOME chief executive Rebecca Knol said the group was confident its proposal was both sensible and workable.

“But it is great to officially get the tick of approval,” she said.

“It 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.”

The ACCC will now seek further submissions on the proposal before making a final decision in June.

South Australian Energy Minister Tom Koutsantonis welcomed the decision, saying SA busineses had been paying a high price for a lack of competition among energy generators.

“What we’ve been seeing is South Australian retailers at the mercy of monopoly rent,” he said.

“This is a good way to break that.”

Koutsantonis said there was “strength in numbers” and that businesses banding together to buy electricity would force generators to offer lower prices.

His Opposition counterpart Dan van Holst Pellekaan also welcomed the decision and encouraged other South Australian businesses to go down this path.

“This is good news for those employers who have been smashed by the highest electricity costs in the nation and have put up with the least reliable supply,” he said.

“This should now be looked at across the SA economy, with the ACCC recently granting authorisation to Melbourne City Council and 13 other parties to establish a joint electricity purchasing group, involving a joint tender process.”

– with AAP

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