The Millville Story: How Reverse Auctions Can Save Governments Serious Money And Avoid Other More Painful Budget And Tax Choices

The Millville Story
                    

Here's a great example of the power of reverse auctions to really make a difference in these tight budgetary times for governments at all levels. The City Commission of Millville, New Jersey was facing a common problem befalling public sector leaders across the board these days - the choice between raising taxes or cutting jobs and citizen services.

Well, Millville leaders discovered a "third way" - using reverse auctions to dramatically cut the town's energy bill! In its November 1st meeting, Millville Vice Mayor Joe Derella was able to announce that the city would be able to meet its budget needs without new taxes! This was specifically due to the fact that through using a reverse auction to select a new energy supplier, the municipality would be able to trim its electrical bill by over $350,000 for the upcoming year.

Millville partnered with Worcester, Massachusetts-based WorldEnergy (http://www.worldenergy.com/) to conduct a reverse auction for the city's annual electrical contract. The firm has conducted reverse auctions for over $20 billion in energy and environmental resources for corporate and public sector clients.  You can view a quick demo on how the company's reverse auctions for energy at http://www.worldenergy.com/knowledge_center/demos/auction/).

The municipal government of Millville uses 9.4 kilowatt hours of electricity per year, and they have been paying coming approximately $1.6 million annually for this needed commodity. With the help of World Energy, through a competitive reverse auction held late in October, the city was able to shave 23% off of its energy costs – which will amount to $357,000 savings for 2011!  Not only did the town’s leadership avoid having to make painful budget cuts in other areas or raise municipal taxes and fees, they were also able to specify that approximately 15 percent of its electricity would come from “green energy” sources. By doing so, Millville will dramatically reduce its carbon footprint – lowering the emissions generated by the local government’s electrical demands by over a thousand metric tons annually. You can read full details on the Millville story by clicking on the link below:

No tax increase in Millville | NJ.com

Analysis

Here at the Reverse Auction Research Center (http://reverseauctionresearch.blogspot.com/), we’ve covered the growing trend of local and state government agencies using similar strategies to Millville’s in order to save considerable dollars in their energy purchases. We’ve seen how many communities along the East Coast (See “The Results Are In: York County Pennsylvania's Positive Charge into Procuring Electricity through Reverse Auctions” - http://reverseauctionresearch.blogspot.com/2010/08/results-york-pennsylvania-charges-into.html) and states such as Delaware (See “Update on 13 Million Reasons: Why State Governments Must Make the Move to Reverse Auctions” - http://reverseauctionresearch.blogspot.com/2010/05/update-on-13-million-reasons-why-state.html) are turning to reverse auctions as an integral part of their contracting strategies. As governments at all levels work through these difficult economic times, it would appear that it is only prudent that public sector leaders examine their own procurement strategies – not just for commodity buys for energy, including electricity, coal, fuel oil and gasoline, but across their entire acquisition budgets – to see how proven reverse auction methods can be applied. With the help of the experienced, specialized providers that can be found in the reverse auction area today, government agencies can see quite considerable immediate and long-term savings that can – as was the case here – thwart the need to make painful budget and tax decisions. And the best news of all is that a reverse auction strategy can be implemented today quickly and efficiently, with no upfront cost, investment, or specialized training needed for either government contracting personnel or for the supply base – which can often be widened, and in the process, make for a far more competitive, efficient, and transparent acquisition process. Contact us today here at the Reverse Auction Research Center (http://reverseauctionresearch.blogspot.com/) to learn more about how to make reverse auctioning work for your particular needs.

Biography

David C. Wyld (dwyld.kwu@gmail.com) is the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a management consultant, researcher/writer, and executive educator. His blog, Wyld About Business, can be viewed at http://wyld-business.blogspot.com/. He also serves as the Director of the Reverse Auction Research Center (http://reverseauctionresearch.blogspot.com/), a hub of research and news in the expanding world of competitive bidding. Dr. Wyld also maintains compilations of works he has helped his students to turn into editorially-reviewed publications at the following sites:

• Management Concepts (http://toptenmanagement.blogspot.com/)
• Book Reviews (http://wyld-about-books.blogspot.com/) and
• Travel and International Foods (http://wyld-about-food.blogspot.com/).