ACCC approves collective bargaining for retail energy prices

The Australian Competition and Consumer Commission has authorised competing members of the Large Format Retail Association to form a collective to bargain for better electricity deals.

This is the first Australia-wide collective power purchase agreement authorised.

The group, which brings together 41 retailers such as Harvey Norman, Ikea, JB Hi-Fi and Bunnings, spans over 4000 retail locations in Australia and consumed over 1 terawatts (the equivalent of one trillion watts) of energy in 2018, costing a combined $200 million.

LFRA chief executive Philippa Kelly noted that the ACCC’s authorisation will help its members to barter for competitively priced and reliable energy supply.

“Electricity is usually the third biggest cost for most of the businesses in this buyers group,” Kelly said. 

“Members of the buyers group could potentially pass on the electricity cost reduction in the form of lower prices, invest in improved product offerings, expanding their product range or employ additional customer service staff with the expected savings.”

Kelly is expecting a very competitive response from the energy market when the group opens its open tender process, and is hoping for a large representation from renewable energy providers. 

“With an 11-year horizon, and the size of the supply deal, we think it’s big enough for some respondents to consider investment in new sources of generation,” Kelly said.

According to the LFRA, additional members not covered by the agreement can request to be included, but the total energy consumption of the buyer group cannot exceed 1 per cent of a State or Territory’s total energy consumption. 

The agreement comes as retail energy prices continue to increase, having more than doubled between 2015 and 2017, leading many to consider alternative methods. 

Dominos, Coles and Woolworths have implemented solar-energy strategies to offset this cost increase, while property players such as Vicinity Centres and Stockland have similar projects in the works. 

Access exclusive analysis, locked news and reports with Inside Retail Weekly. Subscribe today and get our premium print publication delivered to your door every week.

You have 7 articles remaining. Unlock 15 free articles a month, it’s free.