The Ultimate Guide to Energy Brokers
Everything you need to know about business energy brokers and their services
If you own or manage a business, you know utilities cost can be high—especially if your building is large, and requires constant electricity to operate and produce.
Because overhead costs often comprise a large percentage of energy consumption, it’s necessary to take a closer look at how much you’re spending, and if the costs are consistently high, you should research to see if there are better energy and utilities deals available.
Of course, not every business owner has the time to devote to comparing energy costs across potential suppliers. The good news is that a business energy broker can help, and can ultimately help secure you a business energy contract that allows you to save money in the long run.
What is a business energy broker?
There are a few different types of energy brokers, but two of the most common are residential energy brokers and business energy brokers. Residential brokers focus on energy usage in the home, while business energy brokers focus on optimal energy efficiency for businesses.
An energy broker’s main job is to find and present energy suppliers that will offer your business the best deals. In addition, brokers are responsible for closely monitoring energy accounts, and keeping their clients abreast of when their contracts are about to expire. In the event of a transition to another supplier, they will also help ensure that the process goes smoothly.
What services do business energy brokers offer?
Among the services that a business energy broker may offer are the following:
- Gathering of energy quotes from across the industry—an energy broker will pull quotes from all of the best, most reputable, and affordable suppliers in the industry. This saves you the time and energy of having to gather this information on your own.
- Management of supplier transitions—should you make the decision to transfer your business to another supplier, your energy broker will handle the transition for you and ensure all goes smoothly. They will handle the official date of the switch, and check to make sure all your business energy bills are accurate and up-to-date.
- Ownership of contract renewal—as your contracts near their expiration, your energy broker will keep you informed, and may provide you with alternative suppliers to consider. This will help you take advantage of the best energy deals available.
- Energy management advice—though this service may overlap with an energy consultant’s job, brokers may also provide advice about energy efficiency and saving energy around the workplace, and analyze your energy usage to shed light on how you can optimize your consumption.
How Much do Energy Brokers Cost?
As remuneration for their services, an energy broker will take a commission on the total cost of energy that you use. Typically, commission rates vary by broker, though unit rates range from .05p to 5p per kilowatt-hour. At PES, we regularly perform market research to check that our rates are competitive and lower than market average.
Who Needs an Energy Broker?
Any large business that spends a significant portion of their revenue on energy costs (e.g. $20,000+/month) could benefit from a broker’s services. It may be nearly impossible for you to find the time to explore different options from other suppliers when business operations require so much attention. A broker will do the heavy lifting in this area, giving you peace of mind that you’re spending exactly what you need to on energy—no more, no less.
Energy Brokers vs. Energy Consultants
If you’re looking into energy brokers, you may also stumble across services offered by energy consultants. Don’t confuse the two: a broker will negotiate with suppliers and lock down the best prices for you, while a consultant will consistently study your business’s energy trends, identify possible inefficiencies, make suggestions, and more. A consultant’s job is ongoing, and may include services such as;
- solar and energy efficiency analysis
- energy aggregating
- and even bill paying
With climate change becoming a high priority subject and strict global carbon reduction targets, more focus is being put on the business community to transition to net zero and their carbon management. Most businesses will be paying tax per carbon ton emitted in the near future and larger businesses already do. A consultant will help you navigate the complex world of sustainability and provide strategies, technologies, and behaviors to achieve net zero.
As a business owner or manager, you may find that once you’ve employed a broker’s services, you also feel like you could benefit from a consultant’s expertise, as well.
At Professional Energy Services we are energy consultants but also able to provide a broker service.
How does an energy broker compare energy suppliers?
We’ll begin by saying that no matter how good your energy broker is, it is not standard practice for a broker to compare the costs of every supplier. Most brokers will have a list of preferred suppliers they reference regularly based on their relationships, supplier stability and reputation and pull quotes from that existing roster of companies.
Among the suppliers they analyze, energy brokers may consider:
- Market trends
- Contract terms
- Price (per kilowatt-hour)
- Potential cost savings
- All non-commodity costs
- The volume and contract clauses associated
- The structure of the contract and what is included
For a broker to begin the comparisons, you’ll need to provide the following:
- Business address
- Your current supplier
- A copy of a previous monthly invoice/energy bill
- Meter Point Administration Number for electricity/Meter Point Reference Number for gas (MPAN / MPAN number), or a site list with this information for multi-sites.
- A signed letter of authority on letter headed paper
These will help give your broker a frame of reference as they consider options for your business.
Pros and Cons of Using a Business Energy Broker
If you find that you make better decisions by weighing the pros and cons, here are a few pros and cons of hiring a business energy broker.
- Save time and money (which you can instead devote to your business)
- Enjoy a better bottom line
- Benefit from the industry expertise of an insider
- Gain a better understanding of the energy market.
- Access your energy information
- Cut your consumption
- Understand how your energy costs are affected
- You are limited to comparison deals of the preferred suppliers of the broker.
- Broker’s commission is another business expense
However, with this additional business expense it comes with the added value of the positives, also as mentioned in the costs of an energy brokers, the commission fees vary by broker.
A transparent energy consultant like Professional Energy Services will still be able to clearly demonstrate to you what you are saving on a new energy deal, including the broker fees.
How many Energy Brokers are there in the UK?
There are over 3,000 energy brokers in the U.K in multiple different formats. However, even out of the accredited brokers, not all of them are also energy consultants. Keep in mind that smaller brokerages like Professional Energy Services, who also act as consultants, will be able to devote more time and personalized attention to your business as well as positive additional service.
Do you need a license to be an energy broker?
Energy brokers do not need to be licensed like a supplier does, but it is good practice to be accredited. Typically, accredited energy brokers will be listed by the Utilities Intermediaries Association (UIA).
Professional Energy Services is accredited and listed on the UIA website, and is so transparent that we will openly share our profit margins on the tariffs you select.
Because of the lack of accreditation of some brokers, the market is unregulated and as such remains under the same jurisdiction as most trading standards issues. However, the landscape is changing with OFGEM announcing a change to the micro business sector holding brokers accountable to a code of practice.
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