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BUE's Blind Auction vs. Competitors' Reverse Auctions

Our energy consultants save you money with a blind auction process.



Issue #1 - Time constraints

    Competitors' Reverse Auctions

  • In a reverse auction, there are short windows within which the supplier has to evaluate the account; unfortunately, the best bids do not always make it in.

  • BUE's Blind Auction

  • In a blind auction, client's account details and the requirements of the bid (product type, bandwidth, ancillary charges, taxes) are provided to suppliers a few days before the bid deadline, giving suppliers sufficient time to run their analyses and offer their best rate.

Issue #2 – Incremental Bids

    Competitors' Reverse Auctions

  • In a reverse auction, as the closing time approaches, the suppliers drop their bids. They will only bid as low as necessary to beat the most recent bid; they may never get to their lowest acceptable rate. Suppliers truly benefit at the expense of the client.

  • BUE's Blind Auction

  • In a blind auction, there are no such incremental bids. The supplier bids blindly, without knowing what others are bidding, and this uncertainty prompts the supplier to offer the lowest rate it possibly can in an attempt to secure the contract by whatever means necessary.

Issue #3 – Goal of the Bid

    Competitors' Reverse Auctions

  • In a reverse auction, the supplier has a simple goal – to be the lowest bidder among all suppliers. Although this is a laudable goal, it misses the objective. The suppliers simply bid against each other and not FOR the account. If time runs out before a supplier reaches their lowest rate, the customer pays too much.

  • BUE's Blind Auction

  • With a blind bid process, the goal of the suppliers is to win YOUR account. They are competing against other suppliers, but doing so blindly, which forces them to submit the best rate they are willing to provide. Failure to do so means they will not win the account.

Issue #4 – Reliance on Technology

    Competitors' Reverse Auctions

  • In a reverse auction, there is a tremendous reliance on technology in the bid process. For example, the auction is very tightly timed; so, if a bid is late, it will be rejected, regardless of price. A supplier could literally win the auction because of Internet connection speed, not price!

  • BUE's Blind Auction

  • With a blind bid, the supplier is provided sufficient time to submit their offer before the deadline, but if the Internet connection is slow, their email is not working, etc., BUE makes sure the offer is received by whatever means necessary. The lowest bids always make it through to BUE clients, no matter what.

Issue #5 - Participating Suppliers

    Competitors' Reverse Auctions

  • In most reverse auction platforms, virtually any supplier can participate (just like anyone can buy anything on eBay). There is very little, if any, filtering of the disreputable suppliers that ARE in the market.

  • BUE's Blind Auction

  • In a blind bid process, the credibility of the supplier is most certainly taken into account (in BUE's case we only deal with pre-approved suppliers and have rejected many of them for various reasons). All BUE suppliers have met or exceeded "BUE's Supplier Standards and Expectations".

Issue #6 - Scope of the Bid

    Competitors' Reverse Auctions

  • In a reverse auction, the exclusive focus is on the actual rate and nothing more. Suppliers bid a rate only.

  • BUE's Blind Auction

  • In a blind bid, additional considerations can be taken into account. For example, a supplier may be $0.00001/kWh higher on their rate, but offer a much better bandwidth provision. In other words, a blind process ensures a more holistic view of the bid. The rate is the primary, but not necessarily the exclusive, focus – it is the client's prerogative to determine the importance of the rate in light of all other factors.

Issue #7 - "Prepping" the Account

    Competitors' Reverse Auctions

  • In most reverse auction platforms, very little prep work goes into the accounts placed for bid. The accounts' usage history and service class are usually the only factors.

  • BUE's Blind Auction

  • In a blind process (at least in BUE's blind process), long hours of analysis are put into the account; so, it is properly situated before the auction. Your load profile, load factor, capacity implication, future expansion plans, and about twenty other factors are taken into account forcing suppliers to fine-tune their offers.

Conclusion - Which Process Yields the Lowest Rates?

    Competitors' Reverse Auctions

  • In a reverse auction, suppliers bid against each other and in most cases are not required to go down to the lowest rate they would otherwise propose. Again, as long as they are lower than the most recent lowest bid, they have the "lowest" rate. However, their meaning of "lowest" is frivolous.

  • BUE's Blind Auction

  • In a blind bid process, where suppliers do not know what their competitors are bidding, "lowest" means the actual lowest in terms of what they are willing to accept. Therefore, common sense dictates that a blind process generally yields lower rates than a reverse auction platform.

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