1. Auctions in the Energy Industry an industry look at bidding goods and services in on-line reverse auctions

2. 2003 Energy Conference 2 Objectives For Today Industry trends in e-commerce What is an online auction? When can you use an online auction? What are the criteria to perform an action? A Case Study

3. 2003 Energy Conference 3 Who is Pantellos and what do we do? Pantellos is the leader in supply chain services and solutions in the energy industry Rapid Business Assessments Training & Implementation Strategic Sourcing (Supply Contracts) Supply Chain Improvement Projects Business Process Solutions Document Translation Content Management Integration Hub Marketplace Platform Auctions Market Research & Benchmarking Electronic Bid Management Contingent Workforce Transaction Engine Supplier Adoption Analytics Craft Labor E- Settlement Dynamic Services Professional Services Supply Management Service Supply Chain Consulting

4. 2003 Energy Conference 4 Who is Pantellos and what do we do? Bonneville Power Administration

5. 2003 Energy Conference 5 Pantellos’ Auction Experience Proven Results & Track Record Over $ 1 Billion in Volume, 650 Auctions Over $190 Million customer reported savings 18% Average Savings Over 20 utility customers, 13 are in programs Industry Specific Expertise Energy Industry Focused Experience in over 100 Spend Categories Extensive online auction experience

6. 2003 Energy Conference 6 Industry Trends In e-commerce In 2002 ISM reported that in 84% of Global 2000 use a form of e-sourcing 20 of the top 25 largest US Electric utilities utilize auctions Studies find that 40% of a utility’s spend is “auctionable” IDC reported in 2001 $192 billion of goods and services were auctioned, 2002 $ 350 billion In 2003 est that $600 billion will be sourced on-line On-line auctions are quickly becoming a standard in sourcing Pantellos’ customer are experiencing 18% average savings from over $1billion in auction volume

7. 2003 Energy Conference 7 What are On-line Auctions? A process which stems from traditional procurement methods allowing organizations to make more informed decisions through an online, competitive bidding format to obtain best available market prices. On-line reverse auctions are transforming industries into more efficient marketplaces

8. 2003 Energy Conference 8 What Happens in a reverse Auction? 9:30 AM10:0010:3011:0011:30 12:00 PM12:301:001:302:00 PM Closing Price $64.9MBuyer Goal $72.0MFirst Bid $76.6M 10% 18% Overtime Period Millions Opening Period $ 76.0 $ 78.0 $ 74.0 $ 72.0 $ 70.0 $ 68.0 $ 66.0 $ 64.0 GSU Transformers Reverse Auction

9. 2003 Energy Conference 9 Bidder Interface

10. 2003 Energy Conference 10 Auction Value Proposition Benefits to Buying Organizations Reduction in negotiation time and effort Improved pricing, more representative of market Introduction to new, quality suppliers Improves internal processes Shortens overall procurement cycles Improved decision making capabilities Provides market transparency Compliments other supply chain initiatives

11. 2003 Energy Conference 11 Auction Value Proposition Benefits to Suppler Organizations More market feedback and competitive position Typically faster turnarounds and decisions from buyers Typically tighter requirements Value added positions stay in tact (MVB) Introduction to new business opportunities Fair and ethical process

12. 2003 Energy Conference 12 When should I consider an auction? When it meets your procurement goals Currently use a sealed bid process Cost and/or Process savings Introduction to new market Changes in market conditions Establish a value reference for strategic relationship Increased pricing clarity Establish new supplier/buyer relationships Success Factors 3 or more suppliers Selection criteria is quantifiable The good or service has some “margin” or “compressibility” in price A clear bidding spec and a level playing field can be established

13. 2003 Energy Conference 13 Auction Categories Executed

14. 2003 Energy Conference 14 Business Case Statistics for top ten programmatic users of auctions sorted by savings since January 2001.

15. 2003 Energy Conference 15 Buyer View

16. 2003 Energy Conference 16 Closing Thoughts It’s not all about the technology Auctions transform traditional markets into more efficient markets CAPS research concludes that on-line auctions will be a standard way to source goods and services