Do you use or are you looking to use a Business Energy Broker? It’s important to find the right partner who can support and advise you. For many companies, energy costs account for a substantial proportion of overheads and finding ways to reduce expenditure is critical.
Energy reduction is a good way to reduce costs but an energy broker can also help by helping you to understand your expenditure and advising you on the best energy supply contract options for you. Brokerage also means that suppliers have to compete for your business, this generally means that prices are competitive and reflect the current market prices. Brokerages can also offer services to ensure you are paying the correct amounts throughout your contract and advise you on contractual obligations and legislation which could affect your business.
So, it is worth using a broker, but the market is a crowded place and not all energy brokers work in the same way or offer the same services, but there are some key points that will let you know whether you’re choosing a good energy broker.
How do they charge for their service?
Knowing exactly how much you are paying for the energy broker you choose to work with is of paramount importance and will enable you to assess whether or not the offered service represents value for money. Energy Brokers can charge in many different ways and rates can vary widely from less than 0.01 pence to more than 5 pence per kilowatt hour. Some charge a one-off fee directly, whilst others include their commission in the energy cost they offer from the supplier. Charges can be fixed or performance-related which can be complicated. A reputable broker will explain how much their services cost and how they are paid very clearly.
If you are told the service you are being offered is free, or that ‘the supplier pays us’ walk away. There’s no such thing as a free lunch and this suggests the brokerage isn’t being transparent in their disclosure of how they are being paid. Other brokerages refer to a vague ‘small percentage’ of your energy costs. If you have a big spend on energy, then a small percentage can be a large amount of money. A report by Cornwall Energy in 2014 revealed that 37% of businesses believed their energy brokerage was providing the service for free!
Do they offer a tailor-made service to their clients?
You need to ensure that you know exactly what services you are being offered and how much they will cost you. Most energy brokers will offer an individual package depending on your needs. The service offered could vary from on-going support throughout the contract, or just involvement for the procurement process. Many brokers will also offer individual services such as bill validation. Being aware of the service you sign up for will avoid you paying for services you don’t need or being kept in a contract for longer than you need to be.
How much experience do they have?
New energy brokers join the market constantly, some are large organisations from the outset and some are individuals working on their own. It’s important to choose a company that can demonstrate their ability to do the work. It is worth investigating exactly who you are beginning to work with to ensure you can establish a beneficial working relationship.
A brief checklist –
- How long has the energy broker been in business?
- Who owns the business?
- What relevant experience the key people have – do they have relevant experience to support and advise your business? Do they have a thorough understanding of the UK energy market and commercial energy management?
- Can you read references from clients – are you able to contact them?
Will they offer you a dedicated account manager?
Arranging a supply contract is the beginning of the work. Once you have signed your chosen supply contract it will be submitted to the relevant supplier and a brokerage should monitor it till the start date. Once the supply has transferred to the correct supplier the broker should be available to answer your queries throughout the contract. This may not include bill checking and dispute resolution if you have not agreed it with the broker but it should include responses to queries about the contract the broker has helped you arrange. For this reason, it is worth asking if you will be given a dedicated account manager who is an energy expert and who will personally manage your account. Check if you will be able to reach them easily whenever you have a question or would like a face-to-face meeting.
How will they understand your energy usage?
Most energy brokers will ask about how many meters you have and what your current level of energy usage is. But there are further questions which can give a broker a more thorough understanding of a companies’ energy usage. Brokerages who take the time to get to know your business, understand how your particular business uses energy are more likely to be able to offer you advice and support such as consumption reduction, consideration of meter changes or relevant choices in terms of appropriate supply contracts. The aim should be to optimise your energy procurement and minimise the time and money spent administrating it. No broker can guarantee to save you money – markets are markets – but they should work to ensure you have consideration of most options.
Do they have other clients in your industry?
It is worth checking that the energy broker you are considering has a thorough understanding of the UK energy market. Researching what experience they have in all aspects of commercial energy management and in addition if they have knowledge of your particular sector. It may not be vital but there is security in knowing that they have truly dealt with companies like yours.
Does the broker offer several types of contracts?
It has been known for brokers to offer energy contracts that offer them the best terms. This may be the most commission or it may be the least work. It is easy to present cheap per kWh prices when all other costs are then added on at billing stage but are not present in the quote. The use of pass-through charge based contracts have often been misused by brokers to gain business and whilst these products can be the right product they can’t be directly compared to products where all costs are included.
A reputable energy broker will obtain prices from a variety of suppliers and send you a summary along with their recommendations. Contract options can vary considerably and should be selected with your business needs in mind. You should be clear that the comparisons you are presented are fair. The differing contract terms can have a big impact on your final bill.
Are they independent?
An independent brokerage has the opportunity to work with a wide range of energy suppliers and negotiate the best possible terms on your behalf. The broker will obtain bids from various suppliers and offer a summary of recommendations, without showing bias for any one specific option. Make sure that you ask your broker about the number of suppliers they will be consulting and make sure you see evidence that they have.
How many suppliers do they work with?
A brokerage which has established relationships with a good range of suppliers is in the best position to find the most appropriate energy deal for you.
Research the spread of suppliers from which they will be presenting offers. Smaller brokers may not have access to a wide range of energy suppliers and may not be presenting you with the best offers, that said you do not need to use every single supplier but you need a range.
Sometimes your circumstances will also affect the suppliers who are prepared to offer you a contract, issues such as credit history or meter type can restrict the number of suppliers who are willing to quote.
Do they offer any value-added services?
Your circumstances will determine if you need any ‘other services’. For some clients, the need is just procurement, others benefit from using additional services. It helps to talk to several before deciding which broker you will choose.
Customer service is an extremely important factor when choosing an energy broker, if you have an issue you need to know that you have an expert to turn to for help and advice. It’s important to know how easily you can contact them and how they keep you informed about any issues being addressed. Equally, it is worth ensuring your brokerage is up to date with market trends and proactive in updating you. You want to be able to rely on them to advise you of market trends or legislation which could affect your business.
Brokers will encourage you to get prices from them as well as from your current broker. That is fine but it is actually much better to determine the level of service you require and then choose the one who will deliver that service to you and at a price you think represents value for money. The difference between the actual contract prices offered is usually just the difference in the broker’s commission so just ask about that commission upfront. And remember brokers determine the commission level NOT the suppliers although some suppliers put upper caps on the commission levels.
We are proud to be able to offer a full range of additional services that are determined by your individual needs. Mostly our clients opt for a fully inclusive service whereby we deal with all their energy supply needs. If a service attracts a separate cost, then we will tell you at the outset.
Equally, if you just want our contracting service where we manage the placement of your contracts and there is no further support once the supply has transferred to the new supplier or your renewal date has been passed with your current supplier, then that is what we will do. Obviously the two services are charged differently.
Can they offer unbiased advice?
If you’re considering using an energy brokerage you will be aware of the complexities of procuring business energy. To ensure you are being offered unbiased advice, ask for an example of how contracts and prices will be presented to you. Ideally, this process will be as straightforward and clear as possible. You need to be able to compare your options on price, contract terms and conditions and the most appropriate option for your energy use. Having your prices presented including all charges and with standardised estimates of difficult to forecast unfixed third party charges. Where estimates are being used they should be explained and any excluded costs should be identified clearly in the comparisons you are shown.
Will they let you know exactly what you are agreeing to?
Before you sign an agreement to work with an Energy Broker, you need to ensure that the package meets your expectations, but doesn’t exceed them. You don’t want to sign up for services you don’t need. A transparent agreement at this stage will help you avoid paying for services you won’t use or being locked into a contract term for longer than you’d like to be.
Obviously, we have highlighted many areas here put in a nutshell they might read as follows: ensure your broker is right for your business by looking for:
- Access to many suppliers
- Good customer service
- Demonstration of satisfied customers
- Wide range of services
You should avoid any suggestion that the service is ‘free’ or ‘paid for by the supplier’ or ‘just a small percentage of your energy price’
We offer a wide range of other resources and materials to help you make the right decision.
Don’t hesitate to visit Power Direct Ltd to find out more about us or if you’d like to discuss any of our services we offer or advice on your present business energy strategy then don’t hesitate to contact us.