Energy prices at 7 year lows following reverse super auction

by Energy Action | May 12, 2014
Energy Action (ASX:EAX) has witnessed a significant decline in the price of the retail energy component of electricity contracts after a recent reverse super auction for 11 large Australian businesses.

Highlights

  • 7 year low energy prices achieved in NSW and VIC following competitive super auction
  • 8 energy retailers bid for a total electricity value of $107 million across 11 Australian businesses
  • One of the largest super auctions conducted by Energy Action
  • Resulted in a 21% saving off the retail energy component of electricity contracts
  • Competition among retailers intensifies with growing number of reverse auctions
  • Energy Action intend to conduct another super auction in mid June given the recent success and customer interest.

Leading Australian energy management consultancy firm, Energy Action (ASX:EAX), has witnessed a significant decline in the price of the retail energy component of electricity contracts after conducting a reverse super auction to procure electricity for 11 large businesses.

A reverse auction is an auction conducted through an online platform where energy retailers bid for the electricity contracts of businesses and compete on price to secure the contract. Energy Action owns the leading platform for these auctions, the Australian Energy Exchange, which procures approximately $1.3 billion worth of electricity contracts on behalf of Australian businesses per annum, which is approximately 8% of the total commercial and industrial market spend.

This super auction was one of the largest undertaken by Energy Action through the Australian Energy Exchange – evidence of the fact that more Australian businesses are looking at more efficient ways to procure their energy needs and reduce their cost bases. 

Eleven of Energy Action’s large customers across a range of industries secured contracts by participating in back to back reverse auctions over a 48 hour time frame, creating a super auction. The retail energy component price was down 21% on average from existing contract prices with some rates falling to 7 year lows in New South Wales and Victoria. This represents a saving on average of greater than 5% off the customer’s total electricity contracts.

Energy Action Chief Executive Officer, Scott Wooldridge said, “The continuing softening of the market, combined with competitive pricing in the super auction and retailers prepared to lock in long term contracts to the end of 2017, achieved excellent results for our customers at historically low prices.

“It is clear that a competitive online bidding process is delivering cost savings for Australian businesses and through increased uptake of our reverse auction platform, we are helping our customer’s get access to the complete spectrum of energy retailers in the market.”

Energy Action General Manager Operations, Helge Sangkuhl added, “The results achieved for our customers demonstrate the effectiveness of our unique reverse auction platform, the Australian Energy Exchange. We intend to conduct another super auction in the second week of June given the recent success and customer interest.”

For more information, please contact Energy Action on 1300 553 551.