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Texas Energy Market Update: November

November marks the last of the “shoulder months” in ERCOT, those months between the high cooling demands of the summer and high heating demands of the winter. As such, November is typically a good time to be buying natural gas and electricity in Texas, and this year is no exception, though I like to see folks acting even earlier, say in October, if and when they can. That’s because November is often a month of transition, where natural gas moves from an overall state of “injection” to one of “withdrawal,” meaning if some early cold weather hits this month, businesses and residences will be turning up the heat and drawing down from natural gas supplies, which often triggers price increases.

Overall, the Texas market is very stable at the moment. Last year, you may recall power prices surged from the mid-$40s per megawatt up to $58 per megawatt as the cold winter took its toll – a big jump for ERCOT. While we don’t see that happening again this year, we think it is better to be safe than sorry and are suggesting our customers transact now – certainly before December – while prices are so favorable.

Compared to November 2013 – April 2014, today’s electricity and natural gas prices, which mirror each other closely (perhaps more so in Texas than any other state, due to our reliance on natural gas for electric generation) are about 25% lower. Armed with this advantage, it is a good time to pull the trigger on a 2015, or even 2016, contract start.

That’s what we’re finding many of our customers doing today, with the majority of them capitalizing on these low rates with either 24 or 36 month contracts, which effectively locks them in at prices they are used to and that are favorable for their budgets. Based on these recent transactions and where deals are pricing out, I might even suggest the sweet spot in the market at the moment is for contracts of 18 months, 30 months, and, if you can get it, 42 months, which would get you through the June meter read (the end of the Spring shoulder months).

In summary, the Texas market looks very favorable right now. Don’t wait and risk becoming a “price taker” if you can help it – get while the getting is good.

World Energy Solutions Enters into Agreement to be Acquired by EnerNOC

Worcester, MA – November 4, 2014 – World Energy Solutions, Inc. (NASDAQ: XWES), an energy technology and services firm, today announced it has entered into an agreement to be acquired by EnerNOC, Inc. (NASDAQ: ENOC), a leading provider of energy intelligence software (EIS), for $5.50 per share.

Under the terms of the agreement, a subsidiary of EnerNOC will commence a tender offer to acquire all of the Company’s shares of common stock for $5.50 per share in cash, representing an approximate 35% premium over the 20 trading-day average of the Company’s shares and an approximate 33% premium to the closing price of the Company’s shares on November 3, 2014. EnerNOC’s obligation to purchase the shares of the Company’s common stock tendered in the tender offer is subject to certain conditions, including that holders of at least a majority of the shares are tendered during the tender offer period. Following completion of the tender offer, the remaining shares will be acquired in a second step merger at the same cash price as paid in the tender offer.

Under the terms of the agreement, the Company may solicit superior proposals from third parties during a “go-shop” process, run by Canaccord Genuity, that extends for 55 days. It is not anticipated that any developments will be disclosed with regard to this process unless and until the Company’s Board of Directors makes a decision to pursue a potential superior proposal. The agreement provides EnerNOC with a customary right to match any superior proposal.

A special committee of the Board of Directors, consisting solely of independent directors, and the Board of Directors, unanimously approved the transaction. The special committee also obtained and considered a fairness opinion from Duff & Phelps, an independent third-party financial advisor.

Peter Londa, Chairman of the Company and a member of the Special Committee, stated, “The Special Committee of the Board of Directors worked diligently to negotiate and enter into the Merger Agreement with EnerNOC. Through this negotiation, we secured the ability to run a thorough go-shop process to determine whether a more robust offer is available to increase the value being delivered to our shareholders. Our Board is proud of the Company’s management team and employees for their efforts in building a differentiated and market-leading business in our sector.”

Phil Adams, CEO of the Company, stated, “This transaction reflects World Energy’s strategic position and core competencies in the United States retail energy market. Our software-based auction platform continues to demonstrate significant value to participants in the retail energy sector and is poised to deliver significant synergies and cost savings to customers as part of EnerNOC’s energy intelligence software platform. The price premium reflected in EnerNOC’s offer supports our management’s objective to realize value for our shareholders and create an exciting opportunity for our employees.”

The closing of the transaction is subject to the satisfaction of customary conditions, including expiration of the go-shop period, and is expected to close in early January 2015. There is no financing condition to the obligations to consummate the transaction, and the transaction does not require receipt of antitrust approval.

World Energy currently serves more than 4,000 customers with its cloud-based software platform, the World Energy Exchange®. To date, World Energy’s platform is responsible for transacting over $45 billion in electricity, natural gas and environmental commodities for its customers, making the Company among the leaders in the energy procurement market within the U.S. Through the first six months of 2014, World Energy reported $18.9 million in revenue, with a total backlog of $45 million.

Q3 Financial Results

World Energy will release its third quarter financial results on Monday, November 10, after market close and will hold a call at 5:00 p.m. (ET) to discuss them. To access the conference call by telephone, dial 1 (800) 774-6070 (domestic) or 1 (630) 691-2753 (international) and enter passcode 8871616#. Participants may also access a live webcast of the conference call through the investor relations section of World Energy’s website, www.worldenergy.com.

Notice to Investors

The tender offer described herein has not yet been commenced. The description contained in this press release is neither an offer to purchase nor a solicitation of an offer to sell securities of the Company. At the time the tender offer is commenced, EnerNOC and its wholly owned subsidiary intend to file a Tender Offer Statement on Schedule TO containing an offer to purchase, forms of letters of transmittal and other documents relating to the tender offer, and the Company intends to file a Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the tender offer. Investors and stockholders of the Company are strongly advised to read the Tender Offer Statement on Schedule TO, including the offer to purchase, form of letter of transmittal and other documents related to the tender offer, and the Solicitation/Recommendation Statement on schedule 14D-9 that will be filed by the Company, and other relevant materials when they become available, because these materials contain important information regarding the tender offer. Stockholders of the Company will be able to obtain a free copy of these documents (when they become available) and other documents filed by the Company or EnerNOC with the SEC at the website maintained by the SEC at www.sec.gov. In addition, the Schedule TO and related exhibits, including the offer to purchase, forms of letters of transmittal, and other related tender offer documents may be obtained (when available) for free by contacting the Company at 100 Front Street, Worcester, MA 01608.

About World Energy Solutions, Inc.

World Energy Solutions, Inc. (NASDAQ: XWES) is an energy technology and services firm transforming energy procurement and energy efficiency for commercial, industrial, institutional, government and utility customers. The Company’s award-winning, cloud-based auction platform, the World Energy Exchange®, its team of energy experts, and a network of more than 500 suppliers and 300 channel partners form an ecosystem that enables customers to minimize their total cost of energy. To date, World Energy has transacted over $45 billion in energy, demand response and environmental commodities, creating more than $3 billion in value for its customers. World Energy is also a leader in the global carbon market, where its World Energy Exchange® supports the Regional Greenhouse Gas Initiative (RGGI), the first mandatory market-based regulatory program in the U.S. to reduce greenhouse gas emissions. For more information, please visit www.worldenergy.com.

This press release contains forward-looking statements which involve risk and uncertainties. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “forecasts,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company has based these forward-looking statements on its current expectations and projections about future events, including without limitation, its expectations of backlog and energy prices, and its expectations in growth in revenue, operating results, operating margins, and free cash flow. Although the Company believes that the expectations underlying any of its forward-looking statements are reasonable, these expectations may prove to be incorrect and all of these statements are subject to risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections or expectations prove incorrect, actual results, performance or financial condition may vary materially and adversely from those anticipated, estimated or expected. Such risks and uncertainties include, but are not limited to the following: whether the acquisition will be consummated; whether the Company will obtain a superior proposal; the Company’s revenue and backlog are dependent on actual future energy purchases pursuant to completed procurements; the demand for the Company’s services is affected by changes in regulated prices or cyclicality or volatility in competitive market prices for energy; the potential impact on the Company’s historical and prospective financial results of a change in accounting policy may negatively impact its stock price; and other factors outside the Company’s control that affect transaction volume in the electricity market. Additional risk factors are identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and subsequent reports filed with the Securities and Exchange Commission. The forward-looking statements made in this press release are made as at the date hereof. Readers are cautioned not to place undue reliance on forward-looking statements as actual results could differ materially from the forward-looking statements expressed in this press release. Forward-looking statements are provided for the purpose of presenting information about management’s current expectations relating to the future, and readers are cautioned that such statements may not be appropriate for other purposes. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, other than as required by securities laws.

For additional information, contact:

Dan Mees
World Energy Solutions
(508) 459-8156
dmees@worldenergy.com

Source: World Energy Solutions, Inc.

Cities Like World Energy

Haverhill Mayor resizeAcross the country, cities are among our most ardent government energy buyers. They like us, because our online auction process gives them confidence that they are getting the best price in the market, a rate that saves their taxpayers money and underscores their accountability.

We recently announced a great success with the City of Haverhill, Massachusetts. As technology enthusiasts – o.k., geeks – we did take pride in some of the cool, “only happens in our auctions” workings of the Haverhill pricing events:

  • The way we “architected,” i.e. designed and ran, the RFPs showed the City that unbundling/disaggregating their largest accounts from their smaller ones actually got them a better price than having those accounts bid on together as one “load” (intuitively, folks usually think that bundling everything together would drive the most savings; our auctions let users test those assumptions, gain actual price discovery, and act accordingly) AND
  • The winning supplier outbid itself in the final seconds of the auction, transferring extra savings to the customer.

So, while our inner tech and process savant was thrilled by the workings of our award-winning auction platform, The World Energy Exchange®, it was even better to see the Mayor of Haverhill trumpet the results himself on his weekly YouTube post, “Minute with the Mayor” and again in his local paper.

Cities do like World Energy – and for good reason.

Presbyterian Senior Living Simplifies Energy Procurement with World Energy Solutions and EnergyWise Consulting

Online Auctions Help CFO Reduce Power Costs, Tame Complexity across Growing Senior-Living Network

Dillsburg, PA and Worcester, MA – October 7, 2014 – World Energy Solutions, Inc. (NASDAQ: XWES), a leading energy procurement firm, today announced it has teamed again with channel partner EnergyWise Consulting to help Presbyterian Senior Living, a large and growing senior-living network, successfully procure more than 30 million kWh of electricity for three of its Pennsylvania facilities.

Through a series of competitive auctions run on the cloud-based World Energy Exchange®, Presbyterian Senior Living was able to test multiple terms and products behind the PPL, Penelec and West Penn Power service territories. Leveraging this process, Presbyterian Senior Living received more than 120 real-time bids from 12 qualified electricity suppliers, ultimately securing competitive rates for fixed-price contracts running through 2017. Delivery under the new terms begins in January 2015.

“World Energy’s approach to energy procurement maximizes our buying power and is a close fit with our culture,” said Jeff Davis, CFO, Presbyterian Senior Living. “I know from experience that the auctions will deliver a result marked by the highest transparency, competitiveness and integrity. World Energy provides a super-efficient, super-transparent and super-easy way to buy electricity across multiple sites.”

Since 2009, World Energy and EnergyWise Consulting have worked together to procure electricity – behind six separate utility service territories in Pennsylvania and Maryland – for Presbyterian Senior Living communities. Over the course of that time, Presbyterian Senior Living has turned to the energy management firms to help manage a growing portfolio of sites, accounting for more than $5 million in annual electricity spend.

According to Davis, “If every $5 million contract I had ran this efficiently, I would have a wonderful life. The combination of World Energy and EnergyWise Consulting has turned the headache of buying and managing power for hundreds of facilities into a non-event. Especially in an environment where I am repeatedly required to cut costs, I appreciate the savings World Energy reliably delivers. We could never afford the staff needed to buy and manage electricity across our network the way World Energy and EnergyWise do, but even if we could, I doubt we could do the job as effectively.”

Added Nelson Hoover, Founder, EnergyWise Consulting: “My clients depend on me to meet their energy management challenges, so it’s important that I have the best solutions in the market at my disposal. That’s why I have teamed with World Energy over the years as my energy-procurement partner across my portfolio. As is evidenced by the results we have achieved for Presbyterian Senior Living, World Energy deepens my capabilities as an energy consultant and contributes meaningfully to the success of my clients and business.”

Concluded Phil Adams, CEO of World Energy Solutions, “The success of Presbyterian Senior Living’s energy procurement program highlights key attributes of World Energy’s winning approach. First, our auctions reliably deliver the best price in the market. They do so through a process that maximizes competition and advantages the customer. Second, our collaboration with channel partners broadens their service capabilities while extending our market reach, a win-win that results in productive long-term partnerships and loyal customers.”

About Presbyterian Senior Living

Presbyterian Senior Living is a not-for-profit organization providing retirement and senior-care services for more than 85 years. Headquartered in Dillsburg, Pennsylvania, Presbyterian Senior Living provides services to approximately 6,000 seniors in 29 locations in the Mid-Atlantic region of Pennsylvania, Maryland, Ohio and Delaware. Presbyterian Senior Living fulfills its charitable purpose and mission by providing a full range of high quality healthcare, housing and other related community services directed primarily to people 55 and over. For more information, please visit www.presbyterianseniorliving.org.

About World Energy Solutions, Inc.

World Energy Solutions, Inc. (NASDAQ: XWES) is an energy technology and services firm transforming energy procurement and energy efficiency for commercial, industrial, institutional, government and utility customers. The Company’s award-winning, cloud-based auction platform, the World Energy Exchange®, its team of energy experts, and a network of more than 500 suppliers and 300 channel partners form an ecosystem that enables customers to minimize their total cost of energy. To date, World Energy has transacted over $45 billion in energy, demand response and environmental commodities, creating more than $3 billion in value for its customers. For more information, please visit www.worldenergy.com.

This press release contains forward-looking statements which involve risk and uncertainties. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “forecasts,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company has based these forward-looking statements on its current expectations and projections about future events, including without limitation, its expectations of backlog and energy prices, and its expectations in growth in revenue, operating results, operating margins, and free cash flow. Although the Company believes that the expectations underlying any of its forward-looking statements are reasonable, these expectations may prove to be incorrect and all of these statements are subject to risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections or expectations prove incorrect, actual results, performance or financial condition may vary materially and adversely from those anticipated, estimated or expected. Such risks and uncertainties include, but are not limited to the following: the Company’s revenue and backlog are dependent on actual future energy purchases pursuant to completed procurements; the demand for the Company’s services is affected by changes in regulated prices or cyclicality or volatility in competitive market prices for energy; the potential impact on the Company’s historical and prospective financial results of a change in accounting policy may negatively impact its stock price; and other factors outside the Company’s control that affect transaction volume in the electricity market. Additional risk factors are identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and subsequent reports filed with the Securities and Exchange Commission. The forward-looking statements made in this press release are made as at the date hereof. Readers are cautioned not to place undue reliance on forward-looking statements as actual results could differ materially from the forward-looking statements expressed in this press release. Forward-looking statements are provided for the purpose of presenting information about management’s current expectations relating to the future, and readers are cautioned that such statements may not be appropriate for other purposes. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, other than as required by securities laws.

For additional information, contact:

Dan Mees
World Energy Solutions
(508) 459-8156
dmees@worldenergy.com
www.twitter.com/wattsworking

Nelson Hoover
EnergyWise Consulting
(717) 581-1900
nelson@energywiseconsulting.com

Source: World Energy Solutions, Inc.

City of Haverhill Turns to the Cloud to Buy Power

World Energy Solutions’ Online Auctions Fuel Competition for City’s Electricity Load

Haverhill and Worcester, MA – September 29, 2014 – World Energy Solutions, Inc. (NASDAQ: XWES), a leading energy management firm, today announced it has helped the City of Haverhill, Massachusetts, successfully procure over 44 million kWh of electricity to power the City’s 185 accounts.

Through a series of competitive online auctions run on September 2, 2014 over the cloud-based World Energy Exchange®, the City of Haverhill tested 12 different terms and products, receiving 114 bids from seven qualified electricity suppliers over the course of two hours. The auctions resulted in two new 24-month fixed-price contracts, signed that day, which start in December 2014.

“World Energy significantly increased the competition for the City of Haverhill’s business with a process that not only attracted more suppliers to our procurement event and yielded more aggressive bidding, but also gave us the power to make a more informed energy-purchasing decision that benefitted our taxpayers,” said Mayor James J. Fiorentini, City of Haverhill.

Added Orlando Pacheco, Purchasing Agent and Energy Manager, City of Haverhill: “Two things really stood out for us in these auctions. First, they enabled us to see how the market would price our accounts both in aggregate and separately. Surprisingly, we got a much better rate by bringing our water/wastewater and non-water/wastewater electricity accounts to auction separately, rather than bundling them, which saved us $74,000. Second, the design of the auctions led the winning bidder in one of the awarded tranches to outbid itself in the final seconds, putting over $38,000 of their margin back into the City’s coffers.”

Concluded Phil Adams, CEO of World Energy Solutions: “I am pleased the City of Haverhill experienced first-hand how our auction design – from the way we build and sequence RFPs to the Anglo-Dutch feature that prompts suppliers to put their last and final bids in blind – brings added buying power to our customers. Our reputation in government energy procurement is second to none and has been earned over the course of 10+ years delivering fair, transparent and hyper-competitive auction events that yield tremendous price discovery and savings for our customers.”

About World Energy Solutions, Inc.

World Energy Solutions, Inc. (NASDAQ: XWES) is an energy technology and services firm transforming energy procurement and energy efficiency for commercial, industrial, institutional, government and utility customers. The Company’s award-winning, cloud-based auction platform, the World Energy Exchange®, its team of energy experts, and a network of more than 500 suppliers and 300 channel partners form an ecosystem that enables customers to minimize their total cost of energy. To date, World Energy has transacted over $45 billion in energy, demand response and environmental commodities, creating more than $3 billion in value for its customers. For more information, please visit www.worldenergy.com.

This press release contains forward-looking statements which involve risk and uncertainties. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “forecasts,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company has based these forward-looking statements on its current expectations and projections about future events, including without limitation, its expectations of backlog and energy prices, and its expectations in growth in revenue, operating results, operating margins, and free cash flow. Although the Company believes that the expectations underlying any of its forward-looking statements are reasonable, these expectations may prove to be incorrect and all of these statements are subject to risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections or expectations prove incorrect, actual results, performance or financial condition may vary materially and adversely from those anticipated, estimated or expected. Such risks and uncertainties include, but are not limited to the following: the Company’s revenue and backlog are dependent on actual future energy purchases pursuant to completed procurements; the demand for the Company’s services is affected by changes in regulated prices or cyclicality or volatility in competitive market prices for energy; the potential impact on the Company’s historical and prospective financial results of a change in accounting policy may negatively impact its stock price; and other factors outside the Company’s control that affect transaction volume in the electricity market. Additional risk factors are identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and subsequent reports filed with the Securities and Exchange Commission. The forward-looking statements made in this press release are made as at the date hereof. Readers are cautioned not to place undue reliance on forward-looking statements as actual results could differ materially from the forward-looking statements expressed in this press release. Forward-looking statements are provided for the purpose of presenting information about management’s current expectations relating to the future, and readers are cautioned that such statements may not be appropriate for other purposes. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, other than as required by securities laws.

For additional information, contact:

Dan Mees
World Energy Solutions
(508) 459-8156
dmees@worldenergy.com
www.twitter.com/wattsworking

Orlando Pacheco
City of Haverhill
(978) 420-3606
opacheco@cityofhaverhill.com

Source: World Energy Solutions, Inc.

New England Energy Market Update

shutterstock_168655082 - Change of Season 200x128This summer – or rather the lack of a customary heat wave this summer – created an energy market that hit its low point on July 18th in New England. But truth be told, it was not really much of a low point.

As it became apparent that the region was not going to experience the extreme heat that was seen in July 2013, the market turned its attention to the upcoming winter. Consequently, basis costs on the natural gas pipelines for the winter months started moving upward, and so did electricity prices.

The following factors influenced this rise in basis pricing:

  • Vermont Yankee will be closing by the end of December 2014, taking 600 MW off the power grid. Closing this nuclear plant at the start of the winter will create a greater reliance on natural-gas-fired generating units.
  • New England remains natural-gas-pipeline constrained (a big contributing factor to last winter’s high prices)
  • The Farmers’ Almanac is predicting another cold winter for New Englanders.
  • The ISO-NE, the region’s electricity grid operator, will be bringing back its Winter Reliability Program for Dec 2014 thru Feb 2015. In the winter of 2013/2014 this program cost New Englanders approximately $78 million in added fees. The 2014/2015 program has been finalized in terms of the measures that will be taken, but the final dollar cost will not be known until the end of the winter. This year’s program is expected to cost even more than last year’s – close to $100 million. Please note: Suppliers are willing to provide fixed-pricing based upon the $100 million cost estimate. That said, if you choose to fix the 2014/2015 Winter Reliability costs now, be aware that supplier contracts reserve the right to charge you additional fees if the program cost climbs higher than the initial $100 million estimate.

Today, as we are pricing customers for December 2014 and January 2015 contract starts, we are seeing 12-month and 24-month pricing coming in at similar levels, 36-month pricing delivering a bit of discount, and odd months such as 10, 22 and 34-months marking the sweet spot in the market. Of course the pricing you will receive in the market will depend upon your electricity usage profile. Just so you are prepared, prices are coming in at over 10 cents per kWh.

If you are looking to contract, consider doing so sooner rather than later. In the past two Novembers, market prices jumped considerably around November 7th. This year New England market prices already started to climb around September 8th.

Western Massachusetts Electric Company Selects World Energy Solutions for Project Expeditor Program

Designation Creates Energy Efficiency Opportunities for World Energy in Western Massachusetts; First New Project Signed

Worcester, MA – September 23, 2014 – World Energy Solutions, Inc. (NASDAQ: XWES), a leading energy management services firm, today announced it has been selected by Western Massachusetts Electric Company (WMECo), an electric utility serving over 200,000 customers in Western Mass., as an approved contractor within its Project Expeditor Program. This new program is designed to help mid-size and large businesses with average monthly demand of over 300 kW reduce energy costs through the implementation of energy efficiency measures.

As a contractor within the WMECo Project Expeditor Program, World Energy is approved by the utility to provide comprehensive energy conservation measures, including lighting, energy management systems (EMS), HVAC, retro-commissioning and installing variable frequency drives (VFD), for customers throughout the WMECo service territory. The cost of these efficiency projects is being supplemented directly by WMECo, with the utility offering up to 40% percent of the total cost of qualifying lighting and mechanical retrofits.

“Winning this designation within WMECo’s new energy efficiency program is strong validation of our credentials as one of New England’s top energy efficiency firms,” said Rick Galipeau, Vice President and General Manager of Energy Efficiency at World Energy Solutions. “We expect the WMECo Project Expeditor Program to drive business growth for us in Western Mass. and have already identified several project opportunities there.”

One such project, a $350,000+ retrofit for a top boarding school, has already been signed. The comprehensive implementation will include energy efficient lighting, refrigeration, and VFD controls throughout the campus. The project is expected to be completed this fall.

Today World Energy Solutions is a preferred provider of energy efficiency services in five utility programs in Massachusetts and Connecticut: NSTAR’s Direct Install Program for small businesses; NSTAR’s Municipal Program for government entities; WMECo’s Project Expeditor Program for mid-size and large businesses; and the Small Business Energy Advantage Program for Connecticut Light & Power and The United Illuminating Company.

About World Energy Solutions, Inc.

World Energy Solutions, Inc. (NASDAQ: XWES) is an energy technology and services firm transforming energy procurement and energy efficiency for commercial, industrial, institutional, government and utility customers. The Company’s award-winning, cloud-based auction platform, the World Energy Exchange®, its team of energy experts, and a network of more than 500 suppliers and 300 channel partners form an ecosystem that enables customers to minimize their total cost of energy. To date, World Energy has transacted over $45 billion in energy, demand response and environmental commodities, creating more than $3 billion in value for its customers. For more information, please visit www.worldenergy.com.

This press release contains forward-looking statements which involve risk and uncertainties. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “forecasts,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company has based these forward-looking statements on its current expectations and projections about future events, including without limitation, its expectations of backlog and energy prices, and its expectations in growth in revenue, operating results, operating margins, and free cash flow. Although the Company believes that the expectations underlying any of its forward-looking statements are reasonable, these expectations may prove to be incorrect and all of these statements are subject to risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections or expectations prove incorrect, actual results, performance or financial condition may vary materially and adversely from those anticipated, estimated or expected. Such risks and uncertainties include, but are not limited to the following: the Company’s revenue and backlog are dependent on actual future energy purchases pursuant to completed procurements; the demand for the Company’s services is affected by changes in regulated prices or cyclicality or volatility in competitive market prices for energy; the potential impact on the Company’s historical and prospective financial results of a change in accounting policy may negatively impact its stock price; and other factors outside the Company’s control that affect transaction volume in the electricity market. Additional risk factors are identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and subsequent reports filed with the Securities and Exchange Commission. The forward-looking statements made in this press release are made as at the date hereof. Readers are cautioned not to place undue reliance on forward-looking statements as actual results could differ materially from the forward-looking statements expressed in this press release. Forward-looking statements are provided for the purpose of presenting information about management’s current expectations relating to the future, and readers are cautioned that such statements may not be appropriate for other purposes. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, other than as required by securities laws.

For additional information, contact:

Dan Mees
World Energy Solutions, Inc.
(508) 459-8156
dmees@worldenergy.com

Source: World Energy Solutions, Inc.

Trend Watch: M&A, New Entrants, Signal Healthy Retail Energy Market

runners-shutterstock 200x130In 2014, we’ve seen a number of changes in the retail energy market, both in the form of increased merger and acquisition activity among suppliers as well as an onrush of new market entrants. It’s fair to ask “What’s going on here?” The short answer is today’s retail energy market is a dynamic one. Dynamic markets by their nature change. And change is good – a sign of competitive health.

My longer answer follows.

Consider these recent transactions:

M&A Blog Chart Updated 510

Clearly we are seeing some notable players in this activity – many household-name suppliers and big affiliates of utility industry players.  Note, too, how Integrys purchased ENCOA’s Texas book, then was subsequently acquired by Exelon just four months later.  That’s an active market!

When we peel back the veneer of retail energy industry consolidation and divestitures, we see numerous factors at play:

  • Robust markets attract new entrants, lowering margins and driving innovation;
  • Larger established players and fast-growing newer entrants drive to expand market coverage, penetrate existing markets, and/or acquire new product capabilities; and
  • Rising and/or volatile markets demand stronger balance sheets and often precipitate financial stress, which in turn feeds the M&A cycle.

These are the attributes of a healthy competitive market. In fact, the retail energy marketplace has gone through a period of sustained and robust growth since electricity deregulation first took hold in the early 1990’s.  Over the first 6 months of 2014, 72 license applications have been filed by competitive retailers, with about 63% approved through that period (source: DNV GL). These new entrants are aggressive in pursuit of new business, expanding through a combination of product innovation and aggressive pricing. This in turn forces the more established players to evaluate their positions, invest in new products, reduce margins, or exit the business.

Concurrently, fast-growing recent market entrants and established players alike continue to execute on their strategies and expand opportunistically.  A fundamental business strategy concept is at work here: successful companies either compete on price or compete on product differentiation – the former being the focus for many of the highlighted companies in the chart above.  Those who choose to compete on price succeed through operational excellence – which in the energy marketplace means low customer acquisition costs and low supply costs.  Economies of scale serve both ends of this supply and demand equation – and therefore we see these larger players continuing to scale up through acquisitions.  NRG and Exelon as acquirers are both relevant examples.

Last but not least, the volatility in energy markets continues to be a driver of market change.  To serve a customer a fixed-price supply rate, an energy supplier typically will hedge the wholesale supply for the customer.  This requires a significant amount of credit, which can expand as market prices change.  When prices rise, the credit required to acquire a new customer rises, too – which can increase the cost of growth.  When prices fall, the credit required to maintain service of existing customers also may rise – since the likelihood that a customer may default from a fixed price contract increases (think of the concept of a margin call)

Taken together, these three factors – robust markets attracting new entrants; market participants striving to gain market share; and volatile markets demanding stronger balance sheets – are at play in the majority of this year’s highlighted acquisitions and divestitures.

In summary, we are seeing some noteworthy trends in the competitive energy marketplace:

  • Merger and acquisition activity has increased, more recently involving some of the larger industry stakeholders, on both the acquirer and the target sides of the equation.
  • The rate of new entrants is dramatically outpacing the rate of consolidation, with over 40 new competitive retailer applications approved in the first 6 months of 2014.
  • Entrenched players and new entrants are rapidly trying to find their niche and differentiate in this hyper-competitive environment.

So what are the takeaways for energy buyers?

  • The competitive marketplace remains robust, with a continued trend towards increased choice across deregulated regions.
  • With this vibrancy brought by M&A and new entrants, savvy buyers need to stay on their toes. Today’s market is different than the one you may have contracted in one or two years ago:  everything from pricing, which suppliers are in the competitive mix, and which suppliers, including the incumbent, are in the strongest position to best price a deal, have likely changed. Plan accordingly when sourcing and contracting.
  • This includes executing a sourcing process that maximizes supplier participation and competition for your business; drafting your supply contract to ensure that it does not provide optionality to the counterparty which might be exploited under an acquisition or volatile market price conditions; and putting your organization in a position of negotiating leverage, in the event your supplier is acquired, through tighter, more balanced contract terms.

Phillips Academy Secures New Electricity Contract through World Energy Solutions

Online Auctions Attract Robust Supplier Participation and Bidding, Test Numerous Products and Terms

Worcester, MA – September 16, 2014 – World Energy Solutions, Inc. (NASDAQ: XWES), a leading energy management firm, today announced it has helped Phillips Academy, a world-renowned college preparatory secondary school, successfully procure over 26 million kWh of electricity to power its campus.

Through a series of competitive online auctions run on July 25, 2014 over the cloud-based World Energy Exchange®, Phillips Academy tested 12 different terms and products for 80 accounts, including 70 residential buildings. Working with World Energy, Phillips Academy received more than 90 bids from seven electricity suppliers over the course of two hours, ultimately securing a competitive fixed rate. Delivery under the new 24-month contract begins in December 2014.

Since entering its prior electricity contract, Phillips Academy had seen energy prices rise significantly, making it important for the institution to use the best process possible to procure its power, school officials said. By leveraging World Energy’s auction-based approach, Phillips Academy maximized supplier participation in its procurement event and gained valuable visibility into market pricing across products and terms that enabled it to select a contract that delivered the most value to its campus.

“As an alumnus of Phillips Academy, I am delighted by my alma mater’s choice to source electricity through our online platform that promotes competition and price discovery,” said Phil Adams, CEO of World Energy Solutions. “Today, more than 100 secondary schools, colleges and universities enjoy the advantages of World Energy’s approach to energy procurement, something we call ‘Procurement 2.0,’ which helps institutions gain control of the energy buying process and extract the best available price from the competitive market.”

About Phillips Academy

One of the nation’s first independent secondary schools, Phillips Academy – widely known as Andover – stands ready to meet and expand the minds and passions of some of the brightest students in the nation and the world. With 220 faculty members, 300 course offerings, and more than 100 clubs, sports and other programming, Andover offers a broad and deep residential college-preparatory experience. Offering admission on a need-blind basis, Andover seeks to help young people grow intellectually, artistically, athletically and morally. Youth from every quarter from nearly every state and 40 countries study with teachers and scholars who are also coaches, house counselors, advisors, mentors and inspirations. For more information, please see: www.andover.edu.

About World Energy Solutions, Inc.

World Energy Solutions, Inc. (NASDAQ: XWES) is an energy technology and services firm transforming energy procurement and energy efficiency for commercial, industrial, institutional, government and utility customers. The Company’s award-winning, cloud-based auction platform, the World Energy Exchange®, its team of energy experts, and a network of more than 500 suppliers and 300 channel partners form an ecosystem that enables customers to minimize their total cost of energy. To date, World Energy has transacted over $45 billion in energy, demand response and environmental commodities, creating more than $3 billion in value for its customers. World Energy is also a leader in the global carbon market, where its World Energy Exchange® supports the Regional Greenhouse Gas Initiative (RGGI), the first mandatory market-based regulatory program in the U.S. to reduce greenhouse gas emissions. For more information, please visit www.worldenergy.com.

This press release contains forward-looking statements which involve risk and uncertainties. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “forecasts,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. The Company has based these forward-looking statements on its current expectations and projections about future events, including without limitation, its expectations of backlog and energy prices, and its expectations in growth in revenue, operating results, operating margins, and free cash flow. Although the Company believes that the expectations underlying any of its forward-looking statements are reasonable, these expectations may prove to be incorrect and all of these statements are subject to risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections or expectations prove incorrect, actual results, performance or financial condition may vary materially and adversely from those anticipated, estimated or expected. Such risks and uncertainties include, but are not limited to the following: the Company’s revenue and backlog are dependent on actual future energy purchases pursuant to completed procurements; the demand for the Company’s services is affected by changes in regulated prices or cyclicality or volatility in competitive market prices for energy; the potential impact on the Company’s historical and prospective financial results of a change in accounting policy may negatively impact its stock price; and other factors outside the Company’s control that affect transaction volume in the electricity market. Additional risk factors are identified in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013 and subsequent reports filed with the Securities and Exchange Commission. The forward-looking statements made in this press release are made as at the date hereof. Readers are cautioned not to place undue reliance on forward-looking statements as actual results could differ materially from the forward-looking statements expressed in this press release. Forward-looking statements are provided for the purpose of presenting information about management’s current expectations relating to the future, and readers are cautioned that such statements may not be appropriate for other purposes. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, other than as required by securities laws.

For additional information, contact:

Dan Mees
World Energy Solutions
(508) 459-8156
dmees@worldenergy.com
www.twitter.com/wattsworking

Source: World Energy Solutions, Inc.