An association of hundreds of technology firms selected an energy supplier of choice for ease of transaction coupled with a low price. Since the original selection process involved competition among suppliers to win the contract, the members of the consortium were pleased with the results and agreed to fulfill all their power needs with the chosen supplier. Subsequently, however, the vice president of one of the firms felt that with competition removed, the incumbent was no longer incented to find the lowest price for its customers. The VP sought out World Energy and asked us to run an auction event. World Energy helped the client create RFPs and send them out to suppliers in our network, including the incumbent. The night before the auction, under apparent pressure from the incumbent, an officer of the association contacted the company’s CEO and assured him that the current price being offered by the incumbent was the lowest to be found and that he was wasting money on an auction. The CEO contacted the VP, who reiterated his resolve to run an auction and to force the incumbent to bid along with other suppliers. Interestingly, the incumbent bid a lower price into the auction than they had offered the CEO; however, their lowest price was not low enough to win the contract, as another supplier bid lower still, creating even greater savings for the company. World Energy’s fee, far from being wasted money, proved to be only a fraction of the savings achieved. Result: The tech company saved $90,000 (nearly 11% of the previous price) by choosing to let World Energy create a competitive open market in real time when they were ready to transact. Back
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