In many cases, the traditional energy procurement process involved sending a paper RFP to a limited group of suppliers and receiving paper-based bids in return. The process was time-consuming on the front end, and invariably some suppliers would add unique components or options to their responses to create differentiation. This made it time-consuming on the back end, when buyers had to manually analyze the responses and try to make apples to apples out of oranges and bananas. Also, without a way to create price transparency, buyers generally got a price that was “good enough” – but without intense, head-to-head competition, the buyer was left hoping that suppliers would bid aggressively. Further, while there was plenty of paper, there wasn’t always a reliable paper trail to help with compliance and audit issues.
World Energy uses online auctions to get the best price, ensure compliance, and complete transactions quickly, cost-effectively, and with virtually no risk. Auctions last 60 minutes, and buyers and suppliers participate in real-time with full price visibility. An online chart updates automatically with each best bid, illustrating the price slope as the auction proceeds. By creating hyper-competition with price visibility, the technology drives the procurement process, resulting in the very best possible price. Because each bid is electronically time- and date-stamped and all transaction data is maintained on the platform, the system creates an audit and compliance book documenting the transaction process to support Sarbanes-Oxley requirements and ensure protest-free procurements.
Despite the rapid changes that have taken place in the energy markets, one thing has remained consistent: being flexible enough to meet the needs of each customer is still a requirement for success. World Energy offers a variety of online tools, each capable of creating the liquidity and price transparency required to deliver optimal pricing and an efficient marketplace.
At the core of this tool set is a hybrid Anglo-Dutch auction design. Available for both reverse (buyer-centric) and forward (seller-centric) auctions, our design is the product of significant IT investment as well as consultation with leading economists from the University of Chicago, Oxford University, and the Massachusetts Institute of Technology. Designed from the ground up to secure the best price from volatile, non-transparent energy markets, it features a “last bid blind” feature, which means that each bidder is compelled to provide their final price in parallel with the other remaining bidders in the final seconds before the clock runs out. With no time left to react to other bids, this causes a feeding frenzy in which winning bidders outbid themselves an incredible 20% of the time, and by an average of 1-2%. This is why our platform has been described as “brutally efficient at squeezing margins to the bare minimum.” World Energy also offers a proprietary “post and respond” continuous auction process that provides visibility into customer-specific energy pricing over time, and streamlines many aspects of energy purchasing, including supplier quotations, contract evaluation, forecasting, and performance reporting. The customer posts certain information relevant to bidders and leaves the transaction open for an indefinite period of time. Bidders may elect to “hit” the customer’s offer at any time. As soon as one does, an alert is triggered for the customer and World Energy. A negotiated auction event ensues, as we invite other bidders to compete for the final transaction online. This methodology enables the customer to stay in the market until the transaction closes, which creates a far greater likelihood that, as market prices move up and down, the volatile energy markets will eventually deliver the pricing targeted by the customer. The flexibility of multiple online exchange tools means that the customer can always be assured of the best price at any time, and the best price across time. |
