For many companies, energy costs account for a substantial proportion of overheads, and finding ways to reduce expenditure is critical. An energy broker can help you to understand your expenditure and advise you on the best energy supply contract options for you.
Brokerage also means that suppliers have to compete for your business, often resulting in more competitive prices that reflect the current market. What’s more, brokerages can 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.
But, while it is worth using a broker, the market is a crowded place and not all energy brokers work in the same way, or offer the same services.
Use our guide to help you understand the questions to ask your broker, so you can be sure you’ve selected the right one before signing up!
1. How do you charge for your 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. 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.
Brokerages should be transparent about how they are paid. If you are led to believe the service you are being offered is free, or that the broker is paid by the supplier, walk away! Other brokerages refer to a vague ‘small percentage’ of your energy costs. However, if you have a big spend on energy, then a small percentage can be a large amount of money.
Power Direct Ltd answer:
One of our core values is to be as open and transparent as possible about our charges. We always disclose to clients exactly how much we are being paid and are happy to discuss our costs at any time before or during the contract period. We are focused on ensuring we are clear about the service we offer and how much it costs. We also know that our clients are happy with our support, and from their feedback we know our fees are often as much as 50% less than our competitors.
2. What makes you my best option?
New energy brokers are always entering the market. 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, and with whom you can establish a beneficial working relationship.
Here is a brief checklist to consider:
- How long has the energy broker been in business?
- Who owns the business?
- What relevant experience do 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?
Power Direct Ltd answer:
We are one of the UK’s longest established privately owned energy brokerages and our team comprises of experienced energy consultants. Power Direct Ltd is built on the experience of Managing Director Anne Williams, who is a recognised industry figure, having been invited by Ofgem to share her experience with working groups and who frequently offers insight and knowledge about the UK energy market. The relationships our account managers have with their clients are built on trust and confidence and we are happy to provide references on request.
3. Do you offer a specific ‘tailor-made’ service?
It is important to understand exactly what services you are being offered and how much they will cost you. A Service Level Agreement (SLA) is a useful contractual document which details the services being offered, the time period involved and any associated costs. This document should also list any additional charges and the level of support offered. The complexities of your business will determine the service level you require. Most energy brokers will offer an individual package depending on your needs. The service offered could vary from ongoing support throughout the contract, to just involvement for the procurement process. Many brokers will also offer individual services such as bill validation. Understanding 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.
Power Direct Ltd answer:
To ensure we offer a specific, bespoke service to our clients we always determine their energy needs prior to working together. We believe it is important to gain an understanding of a client’s business before making any recommendations. Needs can vary depending on industry and energy usage, the complexity of their property portfolio, and the level of service and support they need.
4. Will I have 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 until 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.
Power Direct Answer:
All of our clients have a dedicated account manager who is an energy expert. They assess the client’s energy needs as soon as we begin working together. Our energy consultants are supported by a highly competent customer support team for administrative assistance.
Our energy consultants are always on hand to offer help and advice throughout an energy contract. Those clients who are in receipt of our invoice validation service will have regular contact from both their dedicated energy consultant and the customer support team.
5. How will you get to understand my energy usage?
Most energy brokers will ask about how many meters you have and what your current level of energy usage is. But additional questions can give a broker a more thorough understanding of your business’s energy usage. Brokerages who take the time to get to know your business and understand how you use 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.
Power Direct Ltd Answer:
Understanding our client’s energy profile is how we are able to give genuine advice and support. We establish an ongoing relationship, which requires an understanding of how our clients are using energy. Clients with more than one site are often advised to bring all sites to one common end date which increases buying power.
We will always talk with clients about their risk management in order to understand how they wish to be able to buy, and whether price is optimal, or budget certainty is the larger concern.
6. Do you have any clients in my industry sector?
It is worth ensuring that the energy broker you are considering has a thorough understanding of the UK energy market, and has experience in all aspects of commercial energy management, alongside 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.
Power Direct Ltd answer:
We serve a wide range of clients nationally, of all sizes and from a very diverse mix of sectors, so we’re well placed to address the needs of any client. We often find that companies may have similar energy supply service needs despite being from different sectors. That said, we are happy to talk about our sector experience with any potential new clients.
7. Can you 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. Where estimates are being used they should be explained, and any excluded costs should be identified clearly in the comparisons you are shown.
Power Direct Ltd answer
We work with a range of suppliers and ensure the recommendations we make to clients are based on their individual energy use and situation. We present all prices to clients and clearly detail the options available in a standard format, making comparison easier. Energy consultants will always talk through the options with their clients. However, we are always keen to emphasise that this is advice – the ultimate decision is always the client’s.
8. What type of contracts are you able to offer?
Does the broker offer several types of contract? It has been known for brokers to offer energy contracts that offer them the best terms, be that the most commission or the least work. And beware of brokers who can mislead you by presenting low-cost per kwh prices that then include additional costs at billing stage. The use of pass-through charge-based contracts have often been misused by brokers to gain business.
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 particular business need 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. Options can include:
- Flexible energy contracts – if you are prepared to invest in a risk-managed contract you can take advantage of changing wholesale prices. This option enables you to spread your purchasing decisions across a contract period and depending on your consumption it could be on a monthly basis. Equally these contracts carry the risk of being caught in a rising market so you may not end up paying less than the equivalent fixed price contract at the outset. These contracts require close management
- Pass-through contracts – for these contracts, the energy costs are fixed but the third party costs are passed on from the supplier at cost. These contracts tend to be more competitive at the outset, but because the third party costs (which for electricity account for 50% of billed costs) are passed to the end user as they are charged to the supplier, there is no risk to the supplier meaning that they do not build in additional margin to cover potential rises in the costs. For the consumer though the increases in third party costs will be felt, so by the end of the contract you might be paying more than you would had you fixed the price at the outset. These need to be considered and assessed on a case by case basis.
- Fixed price contracts – these generally speak for themselves. What you are quoted is what you will pay. Some suppliers offer variations on this where specific costs are fixed, but others can be variable within a range, or if third party costs increase above a threshold.
- Collective purchasing contracts or basket buying options – by combining your energy consumption with another business or organisation you are able to benefit by increasing your purchasing power. Because you are buying in larger supply you can negotiate better contract terms, flexibility and economies.
- Green contracts – For power, specific green contracts are available, so if you are particularly concerned to enhance your sustainability credentials then this is available. It does usually cost more, unfortunately.
Power Direct Ltd answer:
We can offer a full range of contracts dependent on a clients’ needs. We work with a wide range of suppliers and are able to offer a variety of options depending on energy consumption and risk appetite. It all comes down to the bespoke service we offer all of our clients and as an independent brokerage we have no allegiance to any particular supplier.
9. Are you independent, and how many suppliers do you work with?
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 particular 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.
Power Direct Ltd answer:
We are an independent, privately owned energy brokerage. We work with one of the widest selections of energy suppliers in the UK and are very happy to disclose exactly who we work with. Some suppliers are unable to offer some types of contract, but we will always tell you who we have asked and who has offered what. We will provide you with a written comparison which identifies the suppliers on offer and standardised pricing comparisons. In addition, we will go through each of the options with you so that you understand them. We will offer a recommendation – but in the end the choice is always yours.
10. Are there any ‘value added’ services on offer?
Your circumstances will determine if you need any ‘other services’. For some clients the need is just procurement, for others there are additional services that may benefit them. It helps to talk to several brokers before deciding which you will choose. Customer service is extremely important – if you have an issue, you need to know that you have an expert to turn to for help and advice. So it’s important to know how easily you can contact them and how they will 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.
Power Direct answer:
We are proud to be able to offer a full range of additional services that are determined by a customers’ 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 outline this at the outset.
Equally, if a customer just wants our contracting service where we manage the placement of contracts and there is no further support once the supply has transferred to the new supplier or the renewal date has been passed with the current supplier, then that is what we will do. Obviously the two services are charged differently. We are very proud of the relationships our energy consultants establish with our clients and the testimonials on our website reflect the great service they feel they receive. A retention rate of 95% supports this assertion. We work closely with clients to understand their business and also to meet their expectation of support and expertise in managing their energy portfolio.
We also have high standards when responding to clients.. Here are some of the standards that we adhere to for our clients:
- If you call us – we’ll answer straight away, during our working hours.
- If you email – we’ll respond the same day, during our working hours.
- If you have a query and we are unable to resolve it immediately we will contact you within three hours to update you.
- We resolve energy contract, bill or supplier issues and keep you informed of our progress.
- We log meter reads with suppliers on the day we receive them, to ensure accurate billing
- We check, authorise and send utility bills on the same day we receive them through our Same Day Utility Invoice Validation Service.
We are proactive in our approach and ensure our clients are up to date and informed of any industry regulations which may affect them.
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
Avoid: Any suggestion that the service is ‘free’, ‘paid for by the supplier’, or ‘just a small percentage of your energy price’.
Take a look at our infographic, 10 questions to ask your energy broker.