The way electricity is being purchased has changed. If you have not changed your energy purchasing strategy or have no strategy at all, you have come to the right place! We are here to help. Standard auctions are a popular way to give objects and services value, but what is a reverse auction? At MAXIMUM POWER we use reverse auctions to help our clients save money. Look at our key insights about the process and how it can benefit you.
What Is a Reverse Energy Auction?
A reverse auction is a way for sellers to compete for a buyer’s business. In a traditional forward auction — think eBay — a seller initiates an auction with an item they want to sell. Buyers then offer prices for the item, increasing the value. Eventually, the highest offer will earn the product. The opposite process happens in a reverse energy auction. A buyer will initiate the auction for their energy supply, the suppliers will then bid to gain the buyer’s business. The reverse auction process drives the price down, and the buyer can choose the lowest rate and best option for their agreement.
This process acts as a form of Strategic Sourcing. It is a way to improve procurement processes and increase a buyer’s bottom line. When there are several suppliers in a market, reverse auctions foster a greater sense of competition and help buyers reduce their rates.
Additionally, the auction creates the ideal opportunity to compare rates on the same day at the same time. The energy market fluctuates just like the stock market so having all of your supplier bids conveniently at the same time truly gives you the best comparison tool.
Depending on a buyer’s load profile for capacity, transmission, demand, and the magnitude of seller competition, a buyer may significantly reduce costs for their product or service procurement.
Who Is the Reverse Energy Auction For?
Reverse energy auctions can be an ideal process for industrial operations, commercial office space, restaurants, hospitality ventures, and other businesses. Medium to Large Commercial & Industrial users are ideal for this type of process. For a reverse auction to work, there must be a pool of retail energy providers willing to compete with one another for your business. Maximum works with 75 providers across all the deregulated States.
With an extensive market, buyers of all kinds can achieve the savings they are looking for. Electricity reverse auctions are available to small businesses as well as large corporations.
The transparent competition offers fair prices that businesses can view in real-time. Rather than spending hours, days, and weeks shopping from supplier to supplier and hoping they are giving you an apples-to-apples comparison, reverse auctions put all the suppliers in one location, bidding all the same way.
How We Use a Reverse Auction Platform at Maximum Power
We see the value they bring time and time again to our clients.
The energy market is deregulated across the country, making the competition between retail energy providers a significant factor in pricing. This market lends itself well to reverse auctions, and at Maximum Power, we specialize in them.
We start by assessing your current energy bill to understand how you consume energy. From there, we compile suppliers in your area. The reverse auction time is then set typically 4 business days from the initial inquiry. Our reverse auction software allows our customers to watch the competition in real-time on the date of the auction. They can easily see the competition and bids as they come in.
Unlike traditional brokers, our online auctions offer total transparency. Our focus is truly getting you the economical rate, this process will ensure you truly get the best rate available no matter which supplier wins your business. We are truly unbiased on what provider wins as long as the terms and conditions match the parameters of the client.
Once the auction wraps up, you will have a list of providers to choose from. Your dedicated Energy Advisor will be beside you to help analyze your options. Sometimes, you may not choose the lowest rate available, but the close second might provide a better contract for your needs. Regardless of the results, we are here to help and guide you through the volatile energy market and provide savings for years to come.