Getting the Best Energy Rates: Blind Auction vs. Reverse Auction

AuctionIn this economy, businesses are always looking for ways to save money, especially on their utilities.  No one likes to open the mail and see an outrageously high number at the top of an electric bill.  There are several methods to reduce electricity throughout your building, but what if your business can’t cut back on energy any further?  Is there another way to save money?

There is!

If you haven’t reviewed your company’s energy rates recently, now would be the perfect time.  Energy suppliers are always looking for new clients.  How do they obtain new clients?  They have to offer a better rate than their competitors, and they do this in an auction style.  Suppliers will try and outbid each other, giving you the opportunity to obtain a lower energy rate.

There are two ways to go about receiving a better rate: a blind auction and a reverse auction.  These two are almost polar opposites, and we’re here to explain a few major differences and help you figure out which method is best for your company.


Time Constraints

Reverse auction: There is a short window of time when the suppliers evaluate an account, and that could mean that the best bids sometimes don’t make it in.

Blind auction: Suppliers have several days to analyze the client’s account details and the requirements of the bid like bandwidth, ancillary charges, and taxes.  This option offers suppliers sufficient time to determine their very best offer.


Incremental Bids

Reverse auction: As the closing time approaches, suppliers drop their bid since they only need to offer a rate lower than the most recent bid.  They may never even get to their best offer.

Blind auction: Suppliers are required to offer a rate without seeing what others are bidding, which prompts them to present their very best rate right off the bat.


Scope of the Bid

Reverse auction: Suppliers focus solely on the rate.

Blind auction: Suppliers focus on the rate but additional considerations may also be taken into account.  For example, a supplier may be $0.00001/kWh higher on its rate, but offer a much better bandwidth provision.  The client decides the importance of the rate in light of all other factors.

It’s often wise to work with an energy consultant while aiming to lower your company’s energy rates.  The consultant will make the process very simple, and usually, the only task you will have to perform is filling out a bid request.  The consultant will do the rest!



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