Springfield, Mass., powers up through online procurement hookup
On May 20, Worcester, Mass.-based World Energy Solutions staged 20 separate auctions with varying terms and loads for the city. The auctions started at 9 a.m. and ended three hours and 20 minutes later.
A total of eight suppliers placed 127 bids in the auctions, with ConEdison Solutions submitting the winning bid. The company will start supplying the city with electricity on July 1.
“With energy rates at an all-time high, we needed a partner who could help us achieve budget certainty and provide the most efficient procurement process,” Springfield Mayor Domenic Sarno said. “World Energy Solutions absolutely met those two objectives, and the end result was a long-term contract at rates that actually came in 5 percent (or $500,000) below our annual budget forecast.”
Stephen Lisauskas, executive director of the Springfield Finance Control Board, said the procurement is an example of the many improvements in energy management that the city has made in recent years – including more than $15 million in energy-efficiency investments and improved buying, which is saving millions of dollars.
“The World Energy contract is another step in the right direction, allowing the city to lock in rates now and avoid cost increases in the future,” Lisauskas said.
John Harvey, World Energy Solutions’ vice president of government, told GovPro.com that public-sector procurement practitioners “should consider using an online auction for their purchases.”
“Our experience is that using an auction-based approach where everybody is bidding in real time – so you can compare prices on an apples-to-apples basis and quick decisions are made – can drive the commodity price lower when compared to a traditional paper-based procurement process,” Harvey said.
Harvey also urged public purchasers to “maximize the number of bidders and competition in their procurement efforts, to drive down the price.”
Harvey noted that World Energy Solutions has been working with six New England and Mid-Atlantic states on staging energy procurement auctions online. He urged local government officials to check with their state procurement departments to see if cooperative purchasing opportunities for energy might be available to cities and towns in their state.
“Local governments are joining with states to take advantage of aggregation and the pricing that is generated because of the competition,” Harvey said. “Many states do allow cities and towns to join in on bid procurements, to leverage the amount of spend that goes on, so that they all benefit.”
Regulations vary by state, Harvey added.
“Increasing energy costs are putting a strain on city and town budgets across the nation,” World Energy CEO Richard Domaleski said. “While the World Energy Exchange cannot solve the global energy crisis, it can help governments deal with this crisis by providing them with an exchange where they can secure competitive prices for their energy contracts, freeing up municipal funds for schools, police, road repair and other key government functions.”
Seamless online energy acquisition
Before it began using the World Energy Exchange, the city of Springfield procured energy through a consultant using paper-based requests for proposals.
However, rising energy costs and increased energy market volatility convinced the city that it should attempt to procure its electricity in a way that was more efficient and that would provide the city with the best pricing over the next five years.
In addition, the city wanted a solution that would fully comply with its bidding rules and other local, state and federal procurement regulations.
After engaging in a search process for the right energy procurement system, the city chose World Energy Solutions. One of the reasons why World Energy was selected was because its procurement platform can provide date- and time-stamped documentation for each stage of the transaction.
Local governments can bid on a variety of energy commodity contracts in World Energy Solutions’ auctions, including natural gas and renewable energy certificates.