For many tasked with procurement, purchasing energy is just one of several other responsibilities. Even for those who focus most of their time and effort on energy, procurement can often be a complex challenge.
That’s why many organizations turn to an energy procurement partner. But while there are many different types of partners, not all of them can offer the insight and capabilities to help you get the best price for your energy.
This is particularly important in the reverse auction process. Through the auction, energy suppliers compete for your business by offering lower prices than their competitors. When done right, the auction process can drive suppliers to undercut each other’s prices, providing your organization the best possible price on the market.
Some procurement partners may claim to get you the best price, but how do you know that they actually did? Brokers may seek competing offers for energy prices, but many only have access to a limited scope of suppliers. And if some suppliers aren’t included in the auction, your organization could be missing out on better prices.
Understanding the Broker’s Role in Energy Procurement
If obtaining the best price is your primary goal, your choice of partner is critical. Your partner should work with all of the major suppliers in all of the markets that you operate in, while being independently plugged into the markets themselves.
Brokers tend to contract with a select group of energy suppliers, looking to connect them with customers that need to establish a procurement agreement. However, this could be a limited group—sometimes only one to three suppliers in total. If only three suppliers are vying for your business, for example, the broker can only get the best price out of those three suppliers. Other suppliers would likely undercut their prices or offer better terms for your organization, if only they were given the chance to bid.
This is why transparency is so important in energy procurement. Some brokers may not effectively provide a review of supplier contracts, and they are not always equipped to ensure you capitalize on market timing opportunities. Working with the wrong kind of broker can mean missing out on insight into forward markets and valuable pricing opportunities.
The Value of Competition in Energy Markets
To get the best value out of the energy procurement process, you need a neutral partner that can align your organization’s needs with the opportunities available in the market. Just as importantly, your partner needs the tools to capitalize on those opportunities in a transparent way that provides full visibility into the process.
Frankly, you need to know how your partner arrived at their prices for your energy.
An independent procurement partner is not limited to a subset of suppliers, but has access to hundreds of suppliers. A software-based reverse auction opens up the bidding to suppliers across markets, creates a competitive environment that drives suppliers to offer better prices and terms for your organization, and does it all with visibility into which supplier made which offer.
Having options is essential to creating the most value in energy procurement. So it’s important to take a step back, review your strategy, and ask how much you know about your energy costs.
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