Avista Puts E-Commerce Sites to the Test
Although energy e-commerce is a burgeoning industry, there are
only a few electronic exchanges so far that can be used for serving
aggregated retail energy customer loads, and even those that are up
and running still may need to be customized, according to Avista
Advantage, an Avista Corp. subsidiary.
Advantage has taken a new approach to retail energy services by
using its expansive billing customer database as an aggregation
tool that could help in achieving customer savings and boosting
liquidity on several e-commerce sites. Finding the right sites,
however, has been no easy task.
"We're looking for folks [exchanges] that actually are up and
running, not vaporware," said Kevin Nicholls, director of
e-commerce at Avista. "They have to actually be doing transactions
over the Internet, and the majority of the 30 that we were finding
were wholesale types of energy traders not retail and were
operating with basically a fax machine and an office calling
The "typical exchange" at this point in the game only grants
control to commodity sellers. Few exchanges support buyer-centric
business models where Advantage's clients --- the buyers --- can
retain control over the transaction, with the opportunity to review
any offer and choose whether to proceed. Advantage was seeking a
"reverse-auction" format that searches for the lowest price for gas
and electricity, and effectively streamlines the buying process for
Three exchanges were selected out of more than 30 for an initial
trial: Enermetrix, AMDAX and Excelergy. "For Enermetrix there are
[seven] buyer members [web sites] currently operating on that
platform and instead of bucking up for a buyer member seat
ourselves we partnered with one of their existing buyer members
called Usource." Enermetrix's buyer members include
Americanpowernet.com, Scanaonline.com, Unitil.com,
Solutionsondemand.com, Pseget.com, Selectenergy.com and
Usource, which was launched last year, provides traditional and
Internet-based energy services to energy buying groups, commercial,
industrial and institutional customers throughout New York, New
England and Pennsylvania. It is an affiliate of Unitil Corp.
Aggregated electricity requirements for 75 of Avista Advantage's
customer sites are in the process of being posted through
Usourceonline.com for bid by multiple suppliers utilizing the
Enermetrix.com Energy Exchange. Unlike many Internet sites that
merely compare prices offered by suppliers, Usource serves as a
live auction where pre-qualified suppliers make firm bids against
firm commitments by commercial and industrial customers to buy
their electricity and gas.
"In the AMDAX case, going to them directly made the most sense,"
said Nicholls. AMDAX is the platform currently used by
Utilityguide.com and Powerspring.com.
"With Excelergy it was pretty straight forward that we would get
our own customized web site up and developed in short order. All
three of them eventually will be operating divisions of our own web
site. Our clients might even be able to access them directly
through the channel that we provide them."
Avista Advantage plans to conduct a pilot program to see just
how efficient and cost effective energy e-commerce can be over
these three exchanges. The results of the evaluation will determine
whether Avista should use the exchanges for a larger group of
clients, which now represent 50,000 sites across the United States,
Canada and Puerto Rico.
"The reason we are doing this as a pilot is because we believe
there's a lot of maturity that needs to take place in the exchange
business across the board for retail accounts," said John Battista,
director of commodity services for Avista Advantage. "What we're
not saying is these are the only three [platforms] to go through
and they have the final word in exchange marketing. What we are
saying is we think that these are the furthest along at this stage
in the game for our particular customer group. We expect that to
change. We want to get experience in this business, and we want to
help form what exchanges look like for the retail sector."
Avista has found three large end-use customers, including
Starbucks, that are eager to get the best bang for their buck in
energy e-commerce. In total, the customer group represents nearly
400 sites in three deregulated energy markets: Pittsburgh, New York
City and San Diego.
"This breakthrough move affirms Avista Advantage's ability to
leverage its detailed customer information and data base into
something of greater value," said Avista Chairman T. M. Matthews.
"This is a clear demonstration of our core business model ---
leveraging data on our client's behalf --- and this is just the
start. While others are only talking about buying energy through
electronic exchanges, Avista Advantage has demonstrated that it can
execute the posting of actual data on three different exchange
platforms to assist our customers in getting improved market based
"We've essentially pioneered an approach that creates
significant benefits for all involved," said Avista Advantage
President Gerry Crooks. "Avista Advantage has expanded its
strategic relationships and service capabilities, our clients have
access to a valuable service that will assist them in successfully
navigating the deregulating energy environment, and the exchanges
gain liquidity with every one of our clients that elect to
Finding the right exchanges, however, was a critical component
of the service. "We believe it is too early to lock into any one
specific format for Internet based exchange buying, because all of
the business models, processes and technology are new and
evolving," said Battista. "We will continue to offer advanced
energy solutions through our successful alliance with Strategic
Energy Ltd. and evaluate the electronic energy exchanges for a fit
with our customer needs."