Shop Talk: Q&A with Richard Domaleski, World Energy
Photo/Christina H. Davis
Richard Domaleski, CEO, World Energy Solutions
There is no fast-talking caller at an auction orchestrated by World Energy Solutions of Worcester. The company, founded in 1996 as Ocean Side Energy, does its form of auctions virtually. Through a proprietary software platform they bring together energy buyers (like Fortune 500 companies) and energy suppliers in the hopes of delivering the best price for both sides. And in the last year, they’ve parlayed their experience into the carbon-trading game, hosting four auctions for the Regional Greenhouse Gas Initiative. Here, World Energy’s CEO, and one of its founders, Richard Domaleski, talks about his business and its future.
What did you do before you got into the energy business?
I actually had a chain of video stores, Sounds Easy Video. We had one in Thompson and Webster and then we had video stores within stores and supermarkets.
How did you go from running a video store to a rather technical business like energy auctions?
Serial entrepreneur, I guess. I was looking at a couple of business opportunities and one day I was out to lunch with a friend of mine who was an energy engineer doing some work for the ski associations. At the time New Hampshire was going to have the first pilot program to deregulate energy. After talking to him about it I started doing some research and saw that it was very large market — $350 billion plus — and realized it would be very fragmented, with lots of confusion. We decided to go down to Washington and incorporated a company, Ocean Side Energy, and obtained one of the first FERC tariffs to trade energy as an independent firm.
Can you take me through the process of how one of your customers buys energy?
If a university decides they want to buy electricity competitively, they’ll sign an exchange agreement saying they want us to represent them exclusively. The next step is to sit down with the university and really understand their goals in the marketplace. Are they a budget buyer? Do they want a guaranteed savings off the utility? What are they doing as far as efficiency projects? We’ll then pull their historical usage so we’ll get a picture of how they consume their energy. Once we do that, we’ll make a recommendation to run an auction on a specific day and we’ll usually run multiple auctions. We’re paid by the winning supplier, so we have to generate savings or meet the customers’ goals or we’re not paid.
You’ve been doing this since 1996, but it seems like a relatively new concept… How is the market responding? Are people getting what you are talking about, or is it still like 1996?
I think the Fortune 500 companies get it. I think there is a confluence of reasons that they’re being forced to get it: Number one, there’s Sarbanes-Oxley compliance and transparency in government procurement. There’s been a significant push now to have transparency in the government and commercial space and our process is the most transparent to buy gas, electricity or carbon. Then, there’s the recent volatility in energy prices. We’re finding that both government contractors and CEOs and CFOs are now realizing that we really need to pay attention to this commodity because it’s very volatile.
Where do you see oil prices going?
Long-term they’re going up, no doubt about it. If you look long-tem demand for energy resources it will be very hard to meet those energy needs. You may see short-term disturbance in the markets that causes prices to drop, but if you look at demand coming out of India and China and developing nations, long-term the price of oil will go up.
How have you been impacted by the recession?
We’ve seen it on a couple different fronts. Typically we saw customer usage go up 1 to 2 percent year-over-year. This year we saw a drop by maybe 1 percent. What we’ve been seeing is some customers have been dropping our larger competitors and they’ve been moving over to our platform because as of Jan. 1 a lot of companies decided to let go of a lot of consultants. They just stopped writing checks. Now, we come in and say we’ll save you money. I think that’s why we’ve continued to grow through the fall of last year and through the first quarter of this year.
Watch as Richard Domaleski talks about the role his firm plays in the Regional Greenhouse Gas Initiative.
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