Delvin Lane, Managing Director, Energy Management at eEnergy Group Plc
Hidden commissions cause anxiety for UK businesses – and rightly so. Many companies have unknowingly paid extortionate amounts to untrustworthy brokers in the form of undeclared commissions.
It’s time to eradicate ambiguous communications on the state of the market. Nearly half (42%) of UK businesses are unclear on how much they’re charged by their broker, and it’s the duty of brokers to provide transparency on commissions and the services they provide for fees, to help businesses gain clarity on available energy plans.
For organisations to best handle a volatile market, meet regulatory changes, and avoid secret fees, they should ask their energy broker the following questions.
How many suppliers do you currently work with, and do you have special rates with any?
Businesses should be positioned to quickly assess their energy broker’s network and be aware of the range of energy procurement strategies on offer.
Brokers should provide a list of energy suppliers they work with and the percentage of business they place with each supplier. If a broker isn’t willing to provide a comprehensive list of their suppliers, they aren’t being transparent.
A good spread is across seven or eight reputable suppliers – they shouldn’t be tied to one key supplier, and having relationships with multiple suppliers indicates a good reputation.
Do I pay you directly, or do you get a commission from suppliers, and what exactly is included in that fee?
The next question is on how brokers are paid for their services to help gain a clear understanding of all costs involved and reduces the chance of businesses paying hidden fees. Recent stats show that 37% of businesses believe their broker is providing a free service.
Trustworthy brokers will disclose how they are paid in writing, confirming the commission they are earning from the supply contract and that there are no additional fees paid to them from the supplier.
There’s no industry norm in broker fees, which is part of the problem. Brokers have been known to include commissions of up to 5p per kWh, whereas a good broker will cap fees below 1p per kWh.
If a fee of 5p per kWh is included, for example, the commission on a 200,000kWh contract would be £10,000 per year. A reputable broker, with a cap of 1p per kWh, would charge a fee of £6,000 across a three-year contract.
What type of energy procurement strategy, fixed, basket, or flexible, do you recommend for the business?
This is about tailoring. The best brokers will grasp an organisation’s consumption habits, risk tolerance, and sustainability goals. They’ll know that while fixed contracts offer budget stability, they aren’t always the best fit. Basket contracts can be a way for businesses to amplify their buying power.
Flexible contracts? They offer the chance to exploit market changes for savings – but beware of brokers promising low costs that evaporate once the contract kicks in.
How do you ensure my business gets the best price?
Businesses should know how brokers not only source the best energy rates, but how they negotiate with suppliers to ensure their clients receive the best offers.
The standard broker model is to call 5 suppliers and then present the best price to the client. With an advanced auction platform, some can engage with as many as 25 suppliers for gas and power, setting them against each other to secure the best deal.
Often, the final bid comes in around 9% lower than the starting price. Not all brokers are created equal when maximising savings.
Can you provide me with references that I can talk to?
Businesses should validate both their broker’s credibility and quality of service by speaking to their clients.
It’s recommended that businesses ask for three client references, either in the same industry or with a similar consumption profile. Written case studies aren’t enough – businesses should also ask for the name, title, and contact details of clients for an independent conversation with them.
In conclusion
With energy markets evolving rapidly, UK businesses deserve a transparent, honest relationship with their brokers. By asking the right questions and demanding clear answers, companies can ensure they’re not only getting the best deal but also partnering with a broker that truly has their best interests at heart. Don’t stay in the dark. It’s time to illuminate the industry standards.
