Picente, Brown, Roefaro: Reverse Energy Auction Will Reduce Public Sector Partners’ Power Costs

Oneida County Executive Anthony J. Picente, Jr., joined by Rome Mayor James Brown and Utica Mayor David Roefaro, today announced that Oneida County served as lead partner for a group of local public sector partners that participated in an innovative reverse energy auction on Thursday August 6th. Other partners in the auction are the City of Rome, Oneida Herkimer Solid Waste Management Authority, City of Utica and Mohawk Valley Community College. 

Picente said the process resulted in a three-year agreement with a projected annual joint savings amounting to $1,474,957. Oneida County alone is projected to save $872,057. The savings estimates are based upon current costs, and will be greater as electric rates rise.  The winning bid was submitted by HE Holdings, LLC (Hudson Energy) from Suffern, NY.

 “This is another instance of innovative, creative management techniques, partnerships and the use of technology to deliver lower costs for our taxpayers,” Picente said. “The Reverse Energy Auction is a landmark because we are working as a region, because we are breaking new ground, and above all because we are lowering the costs of government in one of the areas that we are all trying to control. I want to thank County Comptroller Joseph Timpano, whose Department has taken a lead role in this project, as well as Purchasing Director Mello Testa, whose department is one of the leaders in using new technology to help taxpayers.”
 
“At a time when so many costs are rising, research done through my office identified the reverse energy auction process as a way that had been used elsewhere to reduce energy costs,” Timpano said. “We looked into the idea after Joe Rella of my staff noticed the potential of the concept, gathered the facts and experiences of governments who had been involved, and developed our own process that would meet our needs, and the needs of our public sectors partners. Whatever the process saves us, that is taxpayer money we are saving.”
 
“This Reverse Energy Auction fulfils my goals of changing the way governments do business, so that we will be aggressively looking at saving money, and not doing the same old things the same old way,” Brown said. “Through this process, we will be able to accept bids not only from local energy suppliers, but from anyone anywhere. Competition drives down prices.”
 
“I have been a strong supporter of any and all actions that we can take to reduce the costs of government,” Roefaro said. “If we can reduce the cost of energy, the money we save is money we can use to address the vital community needs of our city. I am pleased to work in partnership with Rome and Oneida County as we reach new levels of collaboration.”
 
Picente said that nine energy services companies were registered to bid on supplying electricity to the County, Rome, Utica, MVCC and the Waste Authority. Bidders were asked to bid on supplying electricity under a variety of scenarios, including the use of green power in the mix of energy sources, for terms of one, two or three years. The winning bidder will take over the accounts as early as September. Oneida County is the lead agency in the bidding process, with the other public sector partners joining the bid in an effort to increase the total size of the bids so that the savings can be greater.
 
Brown said that the reverse auction process happens quickly. In this case, the bidding ran from 11 a.m. through Noon. Between Noon and 3 p.m., the County, Rome, and other partners evaluated the bids and selected the winning supplier. Electronic contract execution took place last Thursday.
 
“Instead of the usual bid process that takes weeks, this process was over in a few hours and resulted in a savings of money,” Brown said.
 
“Everyone talks about saving money on power costs,” said Picente. “With the Reverse Energy Auction system, we are getting the job done.”
 
A Reverse Auction White Paper issued by World Energy, which conducted Thursday’s auction, provided the following facts:
  • To maximize competition, auction time frames are short and the customer typically signs a contract with the winning bidder or bidders soon after the auction closes, thus effectively streamlining the whole process from days or weeks to just a few minutes with a much more beneficial, cost-effective result.
  • Two, the intrinsic analytical power of today’s technology makes it inherently easy to attract and manage the largest possible number of competing suppliers. While the traditional RFP process typically considers only the top two or three suppliers, the online auction has no practical limitations in the number of bidders that can be contacted or the price comparisons that can be analyzed. And when more suppliers compete, prices are lower.
  • A 2005 auction in the state of Maryland enabled state agencies to reduce costs by $5 million annually for each of the contract’s two-year periods. Based on the success of this initial procurement, the state has conducted four additional auctions, saving Maryland an estimated $49.8 million in electricity costs.