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Online Energy Procurements: Creating Efficiencies & Reducing Costs
November 10, 2010
2Copyright © 2010 World Energy Solutions, Inc. 2
What We Do
World Energy creates and operates energy commodity exchanges that cut costs and
maximize incentives.
electricity natural gas
renewable power
carbon offsets
demand response
3Copyright © 2010 World Energy Solutions, Inc.
Some of Our Clients
Commercial and Industrial– North American Coverage– Risk Management Services– Operations and Reporting– All Industries / Verticals
Government Customers– Federal, State, Local
Utilities– Energy and Capacity
Sourcing– Sarbanes Oxley
Compliance
Environmental – RGGI - RPS– Kyoto - Alberta
Brown University
Over 600 customers and 500 suppliers on the World Energy
exchanges
4Copyright © 2010 World Energy Solutions, Inc.
Competitive Shopping
Contract Term Lengths– 12, 24, 36 month
standard– Interim Terms for
budgeting
Products– Retail vs. Wholesale?– Fixed, Index, Block &
Index– Incorporating Renewable
Energy
Credit Risk– Event of default– Criteria (Fed ID, DUNS,
Financials)
Energy price risks– Consumption Volume– Load Shape– Load Predictability– Congestion
Capacity and transmission risks– Load factor– Changes in PLC– Ancillary services price
risk
Competitive Supplier Landscape
5Copyright © 2010 World Energy Solutions, Inc.
PECO Case Study – September 2010
University– 1 account– Over 13M kWh annually
Event offered 7 RFPs – Fixed, Index, Green – 12, 24, 36 month
Terms
96 bids from 10 suppliers
Resulted in savings of more than $75,000 with 10% greenWorld Energy has delivered over $3 million in savings to its customers in the PPL
service territory and we see similar opportunities in the PECO and Allegheny markets. For Met-Ed and Penelec customers, our process will drive more competition to mitigate post cap prices.
Price to compare
6Copyright © 2010 World Energy Solutions, Inc.
PPL Case Study – May 2010
Manufacturer– 1 account– Over 30M kWh annually
Event offered 5 RFPs – Fixed, Index, Block
Pricing – 12 & 24 month Terms
90 bids from 10 suppliers
Resulted in savings more than $300,000The good news for Pennsylvania businesses is that today’s electricity rates are very
attractive and there are a lot of suppliers hungry for new opportunities. This is a very potent combination. We are seeing excellent liquidity in the newly-opening markets, and strong, ongoing liquidity in PPL and Duquesne. Simply put, this means customers can land great deals.
Price to compare
7Copyright © 2010 World Energy Solutions, Inc.
Additional Considerations
Other Charges: Energy Efficiency / Act 129 Advanced Energy Portfolio Standard
– Mandatory – Utilities & Suppliers– Automatically will be incorporating green energy– Small percentages ramping up annually
Taxes– Gross Receipts Tax (GRT)
Mandatory – Utilities & Suppliers 5.9% (4.4% base PLUS 1.5% Revenue Neutral
Reconciliation) Currently ~6.27% Readjusting to ~6.48% for 2011
– Sales & Use Tax (SUT) Exemptions
8Copyright © 2010 World Energy Solutions, Inc.
After you Shop
What happens after the switch to a Supplier?– Enrollment
New Contracts for Capped Markets Renewal Contracts for current Deregulated Markets
– Meter Read Dates– Invoices
Single Billing Dual Billing through Utility Summary Billing
– Invoice Issues & Resolution– Monitoring Market for next contracting opportunity
Proactive approach See Market Chart
9Copyright © 2010 World Energy Solutions, Inc.
Market Conditions – PJM
10Copyright © 2010 World Energy Solutions, Inc. 10Copyright © 2010 World Energy Solutions, Inc.
Summary
Lowest available price through transparency and competition. Even test the market to find your sweet spot.
Simplified bidding cuts administrative costs for suppliers, who can be more aggressive pursuing customers.
Faster award times minimize risk premiums, cutting costs.
Control and accountability – Meet your objectives with budget certainty, cost savings, and fulfillment of green energy requirements at the lowest available cost.
“Paper trail” no paper process could provide – All procurement information is captured on the platform. All.
“World Energy made our strategic energy purchase easy by attracting a large pool of qualified suppliers to bid for our business and conducted an online auction process that maximized competition and yielded excellent price results. With the elimination of the competitive transition charge in 2011, we expect to pay less for electricity next year.”
~ Don Silverson, CFO of The Hill School
