Large Format Retail Sector Authorised for First Ever National Collective Electricity Deal

In an Australian first, the ACCC today provided final authorisation for competing Large Format Retail businesses to form a national collective buying group to negotiate a better electricity deal than they could individually.

The group comprises 41 of the largest and best-known companies in the industry including Harvey Norman, Beacon Lighting, Bunnings and IKEA. Members of the group span 4,096 individual sites across every state and territory.

In 2018 the Large Format Retail sector consumed over 1 TWh, with approximately 942 GWh in the NEM, 86 GWh in the WEM and almost 10 GWh in the Northern Territory.
The Buyers Group will conduct a tender process for the supply of their aggregated electricity demand.

“Electricity is usually the third biggest cost for most of the businesses in this buyers group. Today’s authorisation means these businesses will have access to competitively priced and reliable electricity supply which will further secure their ongoing business operations,” said Philippa Kelly, CEO of the LFRA.

“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.”

“We are expecting a very competitive response from the market when we go to tender to deliver significant savings to our buyers’ group.

“As part of the tender response we are hoping to have strong representation from the renewable sector.

“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.

“I thank the ACCC for the professional and streamlined process in assessing our application and providing this authorisation,” concluded Mrs Kelly.

In 2018 the combined annual cost of electricity between the 41 participating members was more than $200 million.

The ACCC authorisation runs for a period of 11 years. In that period electricity supply under this agreement must not surpass 1% of total consumption in each State or Territory.