Our transaction methodologies include two forms of Anglo-Dutch auctions, as well as post and respond. In a reverse auction, suppliers compete to win a buyer’s business. The goal is to drive the price lower. The unique Anglo-Dutch design of the World Energy Exchange’s reverse auction is so effective that one supplier described the platform as “brutally efficient at squeezing margins to the bare minimum.” The “Anglo” aspect creates a competitive bidding environment with price transparency that causes suppliers to aggressively bid ever lower. The “Dutch” part imposes a “last bid blind” process by which suppliers are driven to make an aggressive dash to the finish line in order to keep from being underbid. Here, buyers – often wholesale participants – compete for supply. The goal is to drive the price higher. As with the reverse auctions, our forward auctions build liquidity. By creating a demand-side market for the supplier’s business, forcing price transparency to ensure hyper-competition, and providing a built-in audit trail for compliance purposes, World Energy Exchange can deliver both optimal pricing and demonstrable results. Our reverse and forward auctions enable participants to get the best possible price at a given point in time. Post and respond, however, delivers 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. With post and respond, buyers can place their load into an active market and be prepared to move quickly once pricing approaches their individual benchmark. |
