Case Studies: Commercial and Industrial 

1.World Energy helps a major technology company displace its inflexible incumbentAn 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.

2. Competition forces hospital supplier to budget on price 
Some companies and institutions prefer to maintain a relationship with one supplier, valuing the ease of contracting and relying on the incumbent to offer a reasonable price. A Texas VA hospital had such a relationship with a supplier, but in a cost cutting effort, decided not to automatically renew the contract, choosing instead to hold a competitive auction with World Energy.

Upon receiving an invitation to bid in the World Energy auction event, the incumbent supplier contacted its customer advising against an auction. The supplier argued that since they had already offered the lowest price, nothing could be gained by going to auction.

The hospital’s energy buyer was astute enough to insist that if the supplier indeed had the lowest price, then there was nothing to fear from participating in the auction. In fact, what incumbents fear most is price transparency.

Result: Faced with stiff competition (the World Energy auction garnered 40 bids), the incumbent was forced to reduce its price by $3 million in order to keep the contract.

3. World Energy helps Big 3 auto maker fill up for less 
World Energy approached the automotive corporation to hold an auction for the natural gas needs of its auto parts division. The company’s procurement consultant recommended against an online auction, instead planning to send a paper RFP to the top five suppliers. The corporation agreed to allow World Energy to contact our network of suppliers and conduct an online auction on the same day that the RFP pricing was due, thereby testing the efficacy of the auction event.

The suppliers bid in competition over a few hours, each pushing the others’ price down and, knowing that the contracts would close immediately, were able to offer prices that did not contain the risk premiums involved in holding a price long enough for the paper RFP responses to be read, compiled, analyzed and evaluated. With its induced hyper-competition and the real time price transparency of its process, World Energy substantially outperformed the consultant’s process.

Result: Going head to head, the World Energy Exchange beat the paper RFP process by 18%. In a competitive industry where cost savings count, World Energy gave the client an advantage while proving the superiority of a transparent online auction over an opaque, manually intensive paper RFP.

4. Aerospace plant manager tries an alternative, switches back to World Energy
World Energy had been the choice of a plant manager at a leading aerospace and advanced technology company. The manager had used the online auction format for energy procurement in 2004 and 2005 with highly satisfactory results. Then, in 2006, a change in corporate policy took away the ability of plant managers to buy energy independently. Instead, the company mandated involvement by the corporate procurement consultant, who used a paper RFP process.

Without World Energy, the plant manager was dissatisfied with both the price and the process. He felt the loss of transparency limited more aggressive bidding and, since many suppliers have their own format for an answer to any paper RFP, he found it more difficult to accurately compare the various bids submitted. The manager petitioned for permission to return to World Energy for 2007, confident that the online auction was a more successful method for building the liquidity and transparency that lead to the best price. Corporate agreed and he contacted our procurement group.

Using the World Energy platform, the plant manager ran a successful auction event for his following year’s energy needs. The event attracted 41 bids, reassuring the manager that he had received the best possible price that day.

Result: Once a client has experienced the pricing success and peace of mind that comes with World Energy’s people and process, they won’t settle for less. 

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