Energy broker

Energy brokers

Definition. Energy Brokers are at times confused to be thought of as the entity that supplies the energy, however, they are typically a middle-man assisting clients in procuring electric or natural gas rates from energy wholesalers/suppliers. Since electricity and natural gas are commodities, prices change daily with the market. It is challenging for most businesses without energy managers to obtain price comparisons from a variety of suppliers since prices must be compared on exactly the same day. In addition, the terms of the particular contract offered by the supplier influences the price that is quoted. An energy broker can provide a valuable service if they work with a large number of suppliers and can actually compile the sundry prices from suppliers. An important aspect of this consulting role is to assure that the client understands the differences between the contract offers. Under some State Laws,^[1] such as Maryland, they use the term "Suppliers" to refer to energy suppliers, brokers, and aggregators, however there are very important differences between them all.

Energy brokers do not own or distribute energy, nor are allowed to sell energy directly to you. They simply present the rates of a wholesaler, or supplier. More experienced brokers offer a true consulting service.

In the USA, the energy industry is becoming flooded with MLM (Multilevel Marketing) companies where people call themselves energy brokers, but they lack the proper training to offer any kind of useful consulting service.

Who do energy brokers serve? In the USA, energy brokers can serve residential, commercial and government entities that reside in energy deregulated states. In the UK, and some countries in Europe, the entire market is deregulated.

Fees. Energy brokers typically do not charge up front fees to provide rates. If an entity purchases energy through a broker, the broker's fee is usually included in the rate the customer pays. Some brokers will charge a fixed fee for their consulting services.

Pros of using a broker

Supplier Networks Energy Brokers provide access to multiple electric and natural gas suppliers which allows them to provide rates much faster than if a consumer were to shop for rates on their own. Since prices must be compared on the same day, this is a very useful service to clients.

Advice on contractual differences between suppliers Since the contract language directly affects the energy price, a good broker can explain the differences between contract offers, such as swing or bandwidth.

The potential to obtain better prices, provided the broker represents a large number of suppliers.

Aggregation Energy brokers may have the ability to bundle, or aggregate, clients who have a similar demand and usage profile to obtain additional leverage over the suppliers when it comes to negotiating rates.

Consulting Not all energy brokers are consultants; However, the energy brokers who are also consultants will perform a more detailed analysis of a consumers' usage pattern in order to provide a custom rate, which typically results in more cost savings for the consumer. Typically, they do not need any more information than that of an energy broker, because they can pull usage information from the local utility company. There are some national energy brokers that use auditing teams to verify their client's invoices.

References

http://www.opc.state.md.us/LinkClick.aspx?fileticket=70JejiEyw84= http://bettercostcontrol.com/blog/