Energy Brokers
Complete Guide
Understanding Energy Brokers
Deregulated energy market?
01
Multifaceted Role of Commercial Energy Brokers
Commercial energy brokers actively secure electricity and natural gas supplies for their customers. They maintain agreements with numerous energy suppliers, providing competitive price quotes to commercial customers. Beyond procurement, energy brokers offer a range of services to enhance value for their clients.
02
Energy broker sales proposition
03
The Rise of the Energy Broker: How Deregulation Changed REP Sales Strategies
The Advantages of Energy Brokers inDeregulated Markets
In a deregulated market, using an energy broker enables your company to obtain reasonably priced energy solutions. Because of their extensive knowledge of commodity markets and solid supplier contacts, they are able to negotiate low rates, which might save you a lot of money on your electricity costs. In addition, energy brokers keep an eye on market developments to reliably deliver savings on contract renewals.
Having an established energy broker not only reduces costs but also streamlines your operational tasks. Reaching out to your broker simplifies and expedites several activities, such as answering queries, renegotiating prices, or dealing with billing problems related to utilities.
Should you choose not to use an energy broker, these will be internal responsibilities of your organization. However, for those thinking about using a broker.
Energy Usage Evaluation
Market Guidance
Contract Negotiation
Utility Bill Audits
Expert Advice
These benefits underscore why businesses rely on energy brokers
Savings
Convenience
Service
Management
How Energy Broker Quotes Work
- Contract Language
- Supplier Vetting
- Customer Service
Why Energy Brokers Work for You
Energy brokers work for you, not the supplier. They get commissions based on your consumption, so they are motivated to find you the best rates, as opposed to consultants who charge you directly.
Energy broker licenses enable brokers to add a margin to the rates offered by retail energy suppliers and earn a commission when customers pay their bills.Suppliers frequently raise their charges to compensate the costs of hiring salaried salespeople who interact directly with customers. Energy brokers can often negotiate lower rates from suppliers than clients can on their own, therefore the additional broker fee or margin rarely has a direct impact on the customer. Here’s an example of how energy brokers make money:
Energy Supplier’s Cost: $0.050/kWh
Energy Broker’s Fee: +$0.015/kWh
Total Price for Customer: $0.065/kWh
In this scenario:
- The energy supplier pays $0.050 per kWh for electricity or natural gas.
- On top of that, the energy broker charges $0.015 per kWh.
- This puts the total cost to you, the consumer, to $0.065 per kWh, which includes the supplier’s base price plus the broker’s commission.
The Energy Broker earns $0.015/kWh as their commission for facilitating the energy transaction. This commission is typically compensated by the supplier based on the actual energy consumption of the customer over the duration of the energy supply contract.
| Month | Electricity Usage (kWh) | Broker Fee ($/kWh) | Broker Commissions ($ |
|---|---|---|---|
| JAN | 22,000 | $0.01 | $132 |
| FEB | 25,000 | $0.01 | $150 |
| MAR | 11,000 | $0.01 | $66 |
| APR | 14,000 | $0.01 | $84 |
| MAY | 18,000 | $0.01 | $108 |
| JUN | 20,000 | $0.01 | $120 |
| JUL | 28,000 | $0.01 | $168 |
| AUG | 24,000 | $0.01 | $144 |
| SEPT | 17,000 | Combo | $102 |
| OCT | 16,000 | $0.01 | $96 |
| NOV | 19,000 | $0.01 | $114 |
| DEC | 23,000 | $0.01 | $138 |
- Comparing Compensation Models for Energy Expertise
- Licensing for Energy Consultants
Becoming an Energy Broker
- Start as an Agent
- Become a Sub-Broker or Channel Partner
If you manage an organization with multiple sales professionals and aspire to establish your own brokerage firm, consider becoming a sub-broker under a larger licensed broker organization. This structure offers numerous advantages:
- Avoid Rigorous Regulatory Compliance
- Immediate Access to Deregulated Markets
- Ability to Sell for Multiple Energy Suppliers
- Improved Payment Terms with Upfront Commissions
- Access to Support Staff Without Hiring Employees
Starting an independent brokerage company can be challenging due to stringent supplier application processes and less favorable commission terms. Partnering with a larger broker through a sub-broker program provides a turn-key solution for launching and operating your brokerage business effectively. Learn more about our Broker Partner Program here.
- Get Licensed
For those with experience, financial resources, and the capability to manage regulatory requirements, obtaining your own energy broker license is an option. Be prepared for a thorough and demanding application process scrutinized by regulatory bodies. You’ll need to maintain ongoing compliance, forge relationships with energy suppliers, and manage operational aspects. Explore state-specific license requirements to determine if licensing is necessary for your area of operation.
These pathways offer diverse opportunities to establish yourself in the competitive energy brokerage industry.
| State | Electric Broker License | Nat. Gas Broker License |
|---|---|---|
| California | No license required | No license required |
| Colorado | No deregulation | Limited deregulation |
| Connecticut | License required | No deregulation |
| Delaware | License required | No deregulation |
| Florida | License required | Limited deregulation |
| Georgia | No deregulation | No license required |
| Illinois | License required | No license required |
| Indiana | No deregulation | Limited deregulation |
| Iowa | No deregulation | Limited deregulation |
| Kentucky | No deregulation | Limited deregulation |
| Maine | License required | No deregulation |
| Maryland | License required | License required |
| Massachusetts | License required | License required |
| Michigan | No license required | No license required |
| Montana | No deregulation | Limited deregulation |
| Nebraska | License required | License required |
| New Hampshire | No deregulation | Limited deregulation |
| New Jersey | License required | No deregulation |
| New Mexico | No deregulation | Limited deregulation |
| New York | License required | Limited deregulation |
| Ohio | License required | Limited deregulation |
| Oregon | No deregulation | No license required |
| Pennsylvania | License required | No deregulation |
| Rhode Island | License required | No deregulation |
| South Dakota | No deregulation | Limited deregulation |
| Texas | No deregulation | Limited deregulation |
| Virginia | License required | Limited deregulation |
| Washington D.C. | License required | No deregulation |
| West Virginia | No deregulation | No deregulation |
| Wyoming | No deregulation | Limited deregulation |