Although energy e-commerce is a burgeoning industry, there areonly a few electronic exchanges so far that can be used for servingaggregated retail energy customer loads, and even those that are upand running still may need to be customized, according to AvistaAdvantage, an Avista Corp. subsidiary.
Advantage has taken a new approach to retail energy services byusing its expansive billing customer database as an aggregationtool that could help in achieving customer savings and boostingliquidity 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 andrunning, not vaporware,” said Kevin Nicholls, director ofe-commerce at Avista. “They have to actually be doing transactionsover the Internet, and the majority of the 30 that we were findingwere wholesale types of energy traders not retail and wereoperating with basically a fax machine and an office callingthemselves exchanges.”
The “typical exchange” at this point in the game only grantscontrol to commodity sellers. Few exchanges support buyer-centricbusiness models where Advantage’s clients — the buyers — canretain control over the transaction, with the opportunity to reviewany offer and choose whether to proceed. Advantage was seeking a”reverse-auction” format that searches for the lowest price for gasand electricity, and effectively streamlines the buying process forbuyers.
Three exchanges were selected out of more than 30 for an initialtrial: Enermetrix, AMDAX and Excelergy. “For Enermetrix there are[seven] buyer members [web sites] currently operating on thatplatform and instead of bucking up for a buyer member seatourselves we partnered with one of their existing buyer memberscalled Usource.” Enermetrix’s buyer members includeAmericanpowernet.com, Scanaonline.com, Unitil.com,Solutionsondemand.com, Pseget.com, Selectenergy.com andUsourceonline.com (Usource).
Usource, which was launched last year, provides traditional andInternet-based energy services to energy buying groups, commercial,industrial and institutional customers throughout New York, NewEngland and Pennsylvania. It is an affiliate of Unitil Corp.Aggregated electricity requirements for 75 of Avista Advantage’scustomer sites are in the process of being posted throughUsourceonline.com for bid by multiple suppliers utilizing theEnermetrix.com Energy Exchange. Unlike many Internet sites thatmerely compare prices offered by suppliers, Usource serves as alive auction where pre-qualified suppliers make firm bids againstfirm commitments by commercial and industrial customers to buytheir electricity and gas.
“In the AMDAX case, going to them directly made the most sense,”said Nicholls. AMDAX is the platform currently used byUtilityguide.com and Powerspring.com.
“With Excelergy it was pretty straight forward that we would getour own customized web site up and developed in short order. Allthree of them eventually will be operating divisions of our own website. Our clients might even be able to access them directlythrough the channel that we provide them.”
Avista Advantage plans to conduct a pilot program to see justhow efficient and cost effective energy e-commerce can be overthese three exchanges. The results of the evaluation will determinewhether Avista should use the exchanges for a larger group ofclients, 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 believethere’s a lot of maturity that needs to take place in the exchangebusiness across the board for retail accounts,” said John Battista,director of commodity services for Avista Advantage. “What we’renot saying is these are the only three [platforms] to go throughand they have the final word in exchange marketing. What we aresaying is we think that these are the furthest along at this stagein the game for our particular customer group. We expect that tochange. We want to get experience in this business, and we want tohelp form what exchanges look like for the retail sector.”
Avista has found three large end-use customers, includingStarbucks, that are eager to get the best bang for their buck inenergy e-commerce. In total, the customer group represents nearly400 sites in three deregulated energy markets: Pittsburgh, New YorkCity and San Diego.
“This breakthrough move affirms Avista Advantage’s ability toleverage its detailed customer information and data base intosomething 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 thestart. While others are only talking about buying energy throughelectronic exchanges, Avista Advantage has demonstrated that it canexecute the posting of actual data on three different exchangeplatforms to assist our customers in getting improved market basedpricing.”
“We’ve essentially pioneered an approach that createssignificant benefits for all involved,” said Avista AdvantagePresident Gerry Crooks. “Avista Advantage has expanded itsstrategic relationships and service capabilities, our clients haveaccess to a valuable service that will assist them in successfullynavigating the deregulating energy environment, and the exchangesgain liquidity with every one of our clients that elect toparticipate.”
Finding the right exchanges, however, was a critical componentof the service. “We believe it is too early to lock into any onespecific format for Internet based exchange buying, because all ofthe business models, processes and technology are new andevolving,” said Battista. “We will continue to offer advancedenergy solutions through our successful alliance with StrategicEnergy Ltd. and evaluate the electronic energy exchanges for a fitwith our customer needs.”
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