Large Format Retail Sector Welcomes ACCC Green Light for National Agreement on Energy Deals
A milestone in the Large Format Retail Association (LFRA) led journey to create the first nation-wide collective bargaining and joint purchasing arrangement for energy was reached on Friday 20th September 2019.
The ACCC issued a draft determination proposing to authorise members of the LFRA to jointly tender and negotiate with electricity suppliers for cheaper power prices.
The ACCC also granted interim authorisation to the LFRA, allowing members to begin the initial stages of the tendering and negotiation process while the ACCC completes its assessment.
“LFRA and its members want to jointly tender so they can pay less for their electricity,” ACCC Commissioner Stephen Ridgeway said.
“We propose to allow this joint tendering because we expect it will lead to more competition between suppliers for the group’s combined electricity demand.
“Collectively tendering is also likely to save the retailers time and money compared to individual negotiations for electricity supply,” Mr Ridgeway said.
There are currently 41 participating members of the Buyers Group. LFRA CEO Philippa Kelly insists that having access to competitively priced and reliable electricity supply is critical to each of their ongoing business operations.
“Reduced electricity costs and transaction costs will allow the industry to continue growing, thrive and service the increasing demands for homemaker goods including lighting, hardware, electronics, furniture, sporting goods, pet supplies and outdoor recreational equipment,” Ms Kelly added.
“The process will operate as an open tender and we hope to have substantial competition for the business from qualified electricity suppliers,” she explained.
The arrangements are unlikely to cause any significant public detriments, given participating LFRA members’ aggregate demand for electricity is a very small proportion of total electricity consumption of electricity in each State and Territory.
In 2018 the LFRA-led group consumed over 1TWh, with approximately 942 GWh in the NEM, 86 GWh in the WEM and almost 10 GWh in the Northern Territory.
The ACCC’s authorisation would also allow LFRA to add new members to the group in future, provided the total demand of the group does not exceed 1% of the annual consumption of electricity in any state or territory.
Philippa Kelly, LFRA, CEO
