State Launches First Natural Gas Procurement Using World Energy’s Reverse Auction Platform
The State of Rhode Island recently conducted a reverse auction for natural gas supply. The State of Rhode Island’s Department of Administration (“DOA”), Division of Purchases solicited bids from qualified suppliers of natural gas to provide an alternative gas supply to meet a portion of the State’s total firm requirements for its many Department of Administration buildings, Court facilities, other State accounts and certain participating municipalities.
The State utilized an Internet-based energy auction platform provided by World Energy Solutions, Inc. (NASDAQ: XWES) to obtain pricing for this procurement. The procurement was conducted in a two-step process. Natural gas suppliers were required to submit a technical proposal that was reviewed in accordance with the Request for Proposal (“RFP”) issued by the State in August. Based on a review of the proposals, three (3) suppliers were found acceptable to participate in the auction event that was held on September 29, 2009. Approximately 15 different auctions took place from 10:00AM to 12:30PM based on different delivery quantities, types of accounts and contract periods.
The overall savings achieved from the auctions for the supply of natural gas for the entire soliciting group is approximately 13% from the last contract and equates to approximately $400,000 thousand per year over the three year contract period. Supply contract services will commence November 1, 2009 with two (2) suppliers, Hess and Santa Buckley.
“It is always critical we look for cost savings in every spending area,” said Gary Sasse, Director for the Department of Administration. “This creative and unique reverse auction platform elicited great interest from energy providers, resulting in significant cost savings to the State.”
The State is also experiencing substantial savings in commodity costs as the price of natural gas has dipped approximately 30% over the past 12 months. The Department of Administration will continue to strategically analyze the procurement of energy commodities including natural gas, electricity and transportation fuel.