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In the early days of deregulation, companies and brokers often issued paper-based requests for proposals (RFPs) as a means of soliciting energy bids. Yet as competitive markets have opened and energy decisions become more complex, the limitations and inefficiencies of paper-based approaches have been exposed. Today, the torch has been passed to World Energy and its advanced procurement methodology – one backed by people, process and technology – to drive liquidity (i.e. supplier participation), create transparency (i.e. price discovery) and heighten competition, all in the service of the customer.
How do we do it? One of the most visible ways is through our online auctions. By connecting energy buyers with multiple suppliers in a structured online auction, World Energy delivers buyers a significant advantage, with energy suppliers competing against each other in real time, on the same terms, and driving down their prices with each bid. As a result, customers can lock in the best available pricing and contract terms with less purchase risk.
The World Energy Exchange, our award-winning online auction platform, is highly flexible and accommodates many auction types, including Anglo-Dutch, blind, multi-round, clock and others. For the purposes of this overview, we’ll focus on two:
Anglo-Dutch Auctions
A hybrid design unique to World Energy, the Anglo-Dutch auction combines the best features of the English, “Sotheby’s-like” auction, where bidders compete in an open, real-time environment, with those of Dutch auctions, which are marked by submissions of sealed bids. The end results is an auction where competitors can see the leading bid until the closing seconds, which causes suppliers to put in a best and final offer – the poker equivalent of going all in – as the seconds tick down at the end of the auction. Twenty percent of the time, the then-leading supplier outbids itself to win the business, transferring the margin from the supplier to the customer.
Blind Auctions
While our Anglo-Dutch auctions enable participants to get the best price possible at a given point in time, our blind auctions deliver the best price across time. With this methodology, energy buyers can post their demand for their load on our platform for suppliers to see and react to. They may even set the price they are looking for. Suppliers in turn respond, stating their interest by submitting offers. At this point, the buyer can do one of two things: 1) accept the supplier's offer; or 2) contact other suppliers to create a competitive situation, using the market response as a starting point rather than an end point. Energy procurement with blind auctions lets buyers place their load into an active market so they are prepared to move quickly once pricing approaches their individual benchmark.
Several companies burst onto the online energy procurement scene in the late ’90s and early 2000s, with only a handful emerging as leaders who continued to bring new levels of competition
and innovation to this traditionally conservative market. For our part, World Energy has been consistently noted for our breakthroughs, earning our customers more than a dozen top awards for strategic procurement, while earning for ourselves the top spot in energy research and consulting leader KEMA, Inc.’s rankings of leading retail energy channel partners.
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