By Becky Thompson
The Digital Age has caused major overhauls in many business sectors, and the energy industry is no exception.
New technology available makes managing your energy easier than ever. Let’s say you want to lock in a specific rate. You can receive automated emails letting you know when the market has reached that rate, and you can sign a contract that day.
Or, if you participate in a load management program, you can receive alerts on peak days so you can lower your usage and improve your load profile during the outlined hours.
Perhaps the most relevant new technology that is revolutionizing energy purchasing for complex customers is reverse auction software. During a reverse auction, suppliers compete in real time to offer the lowest rate for your electricity or natural gas supply.
Using a reverse auction for your energy procurement benefits you in three ways.
1) You have complete control.
In a reverse auction, you have the opportunity to take part in more steps of the purchasing process. You participate in the RFP creation so you know exactly which suppliers receive it and what is required of them. You can also select the date you want the auction to be held and watch the auction as it’s happening. That way, you can see when and how suppliers are bidding.
Additionally, the auction gives you rate transparency because it strips out any built-in premiums, margins, or last-minute fees that suppliers might otherwise include. This transparency makes it easy for you to explain the auction and its results to your board or executives.
2) The level of competition is elevated.
In traditional energy procurement, suppliers submit a one-time sealed bid and don’t know what rates other suppliers have given.
During a reverse auction, suppliers can see the current low bid as they actively submit their bids in real time. This encourages supplier competition and drives down rates by 7-10% compared to other procurement methods.
3) Your procurement strategy is air-tight.
A reverse auction gives you reliable process documentation. Each bid submitted during the auction is logged with a time and date stamp. This gives you an apples-to-apples comparison between suppliers because all bids are entered within the same time frame and reduces any favorability. The documentation you will receive at the conclusion of the auction validates your purchasing process, which you can share with your board or executives.
Add Technology to your Energy Strategy.
Using technology is a simple way to strengthen your energy strategy. Reverse auctions give you the transparency, competitive rates, and accountability measures that you might not get through other procurement methods.
Contact your energy advisor to see if your organization qualifies for a reverse auction and learn about other valuable tools you can integrate into your energy strategy.
About the Author
Becky is a Strategic Energy Advisor specializing in the public sector, including schools and municipalities. She has been in the energy industry for over five years, working from the ground up as an account manager and then as an electric pricing team lead. Her background knowledge of the inner workings of an energy company helps identify actionable strategies for making her clients’ energy strategies both easy and cost effective. In her free time, Becky enjoys any activity that requires being outside and making her son belly laugh.
Becky can be reached via email at firstname.lastname@example.org or phone at 630-225-4561.