CASTING INNOVATIONS
Reverse Auction Leads to Utility Savings In early 2014, when a midsize
nonferrous metalcasting facility in the Midwestern U.S. wanted to decrease its expenditures in electricity and natural gas, the company’s chief fi- nancial officer learned about a bidding process that had the potential to sig- nificantly reduce costs. Brian Reinke, an independent energy consultant and manager of the American Foundry Society (AFS)’s Energy Solution program, placed the company in con- tact with EMEX LLC, Houston, a consulting firm specializing in energy procurement-based risk management. Te consultants suggested
the metalcaster use their reverse auction online platform as a way to check market prices currently available directly from wholesale suppliers. Te real-time, on- line auction allows metalcasting facilities (and other businesses and non-profits) to have suppli- ers bid against one another so the customer can choose the best electrical and gas rates. Te plat- form, available to AFS corporate members, helps manage utility costs by having suppliers compete for business. Te metalcasting facility used
the EMEX reverse auction for both natural gas and electric sup- plies. Te electric supply auction resulted in a three-year, fixed-price contract with 22% savings when
Reexamining electricity procurement could lead to significant savings for metalcasters.
compared to the facility’s existing electric rate. “After our raw material pur-
chases and payroll, utilities are our biggest hit,” said the Midwestern metalcaster’s CFO. “Definitely, if we can get more bang for our buck by having utility companies bid against one another, we want to do that.” Prior to the auction, EMEX
consultants audit and project a facility’s utility expenses, set the
parameters for the auction and review supplier contract terms to ensure bidders meet predetermined specifications. Rates are available 24 hours a
day, meaning there are no time- of-use premiums that impact the scheduling and cost of melting op- erations. Additionally, penalties for unexpected increases or decreases in consumption are not allowed in the contracts. “I’m by no means a guy with a
crystal ball,” said the CFO. “But as more and more of this continent is industrialized, energy becomes a more scarce commodity. If you can lock in prices today, considering this is something that can go up, you might as well hedge it.” Te metalcaster also entered into
a three-year contract at a fixed rate for natural gas supply, again, with no consumption penalties. “The process helped alleviate the untold hours trying to figure this stuff out ourselves,” said the CFO. “We don’t want to drag ven- dors in here one at a time and get bids one by one. Once it got roll-
The reverse auction can include bids for contracts ranging from six months to three years. 66 | MODERN CASTING February 2014
ing, it didn’t take long at all.” Visit
www.afsinc.org for more information.
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