How To Review Your Energy Broker Contract

Energy brokers are your guides through the intricate landscape of energy procurement, bridging the gap between businesses and energy suppliers. Their role is pivotal in securing competitive energy prices and unearthing the best deals for your energy broker agreement. However, it’s vital to note that while they render valuable services, these brokers earn commissions that can significantly impact your overall energy costs.

Our experience has shown that not all energy brokers operate with complete transparency or in the best interest of their clients. Some manipulate complex agreements, making it hard for businesses to grasp the extent of the commissions they’ll end up paying on top of their energy rates.

In this blog post, we’ll guide you through the steps to dissect and understand energy broker agreements, including commissions, ensuring you secure a fair deal.

Understanding the Commission Structure

To begin, you need to know how the broker earns their compensation. Brokers often employ two different commission structures:

Flat Fee: Some brokers charge a set fee for their services, irrespective of your business size or energy usage. This fee might be paid upfront or staggered across the contract. However, be cautious—additional charges, like transaction fees or ongoing management costs, might be buried within this structure. Hence, a thorough review of the terms & conditions of your agreement is crucial before signing.

Percentage of Energy Cost: Others opt for a percentage of your overall energy expenses. While this can potentially lead to cost savings and offer transparency, it’s essential to remain vigilant. Some brokers inflate commissions by manipulating numbers or concealing fees within your kWh rate.

Reviewing the Commission Rate

Once you understand the structure, scrutinise the commission rate for fairness and competitiveness. Research average rates in your area and compare them to the broker’s offer.

Hunting for Hidden Fees

Besides the commission rate, watch out for hidden fees or undisclosed markups. Certain brokers slip in administrative or transaction fees, impacting your energy costs significantly. Carefully go through and read the agreement, seeking clarity on any ambiguous terms you’re not sure of. If the broker isn’t forthcoming and doesn’t go into detail explaining everything, it could signal transparency issues.

Detecting Conflicts of Interest

Some brokers might favour specific suppliers due to partnerships or higher commissions, potentially conflicting with your business interests. Look for signs within the agreement indicating such biases, like preferential treatment toward certain suppliers.

Decoding the Termination Clause

Lastly, understand the termination clause to comprehend your rights and obligations if you opt to end the contract early. Some agreements might impose fees upon early termination and could affect your rate.

By navigating these crucial steps, businesses can ensure transparency and fairness in energy broker agreements, safeguarding their interests and financial well-being.

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