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- Excellent customer service
- Cheaper fixed energy rates
- A hassle-free supplier switch
What is a business energy broker?
Business energy brokers have relationships with numerous business energy suppliers across the UK and use these to help their customers arrange energy contracts. A business energy broker can provide a range of quotes to connect your business with the best possible deals, sparing you the hassle of speaking to individual suppliers.
Business owners often have legitimate questions about how business energy brokers operate. In this guide, we’ll help you answer these questions.
💡There is a significant ‘loyalty penalty in the business energy sector. If you don’t regularly switch and actively seek out the best deals, you will end up paying unnecessarily high energy prices.
Contents
How business energy brokers operate
Business energy suppliers typically do not publish their prices, making it difficult for business owners to instantly collect a range of comparable quotes.
A business energy broker helps SMEs find and take advantage of the best business energy deals available in the market. Here’s how they do it.
Relationships with business energy suppliers
Business energy brokers, who usually have years of experience in the commercial energy industry, cultivate strong relationships with business energy suppliers to leverage the best deals for their customers.
Business energy brokers will have established introduction agreements with their suppliers. The agreements allow the broker to request quotes and arrange for new customers to switch to the supplier in exchange for an agreed broker commission.
Collecting energy quotes for your business
Brokers typically utilise energy broker support software to automatically request quotes from their suppliers as part of the process. Once they’ve gathered all the relevant details about your business energy needs and you’ve signed a Letter of Authority (LOA), they’ll use this software to collect quotes from suppliers who can offer your business a contract.
For small companies, this process can happen in just a few seconds. However, bespoke quotes are required for larger businesses with half-hourly meters, which can take a few days.
Arranging your business energy switch
Should you want to proceed with one of the quotes provided by your business energy broker, they will facilitate the switching process on your behalf.
Your broker will collaborate with your chosen business energy supplier to draft a fixed-term business energy contract at your quoted rates. Once the contract is signed, your broker will submit it to your new supplier.
The process of switching suppliers typically takes between 4 to 6 weeks. During this period, your broker will monitor the progress and assist in resolving any issues that may arise.
How business energy brokers get paid
Most business energy brokers assist you through the burdensome process of gathering quotes, securing the best deal, and switching suppliers without directly charging you.
Business energy brokers, however, do receive a commission from the work they do paid by the energy supplier. It’s important to know that your business indirectly pays this if you use a broker to arrange a contract for your business. Here’s an explanation of how this works.
When a broker successfully facilitates your switch to a new energy supplier, the supplier gaining your business will pay the broker a commission. This commission is incorporated into your business energy contract as an additional cost per kilowatt-hour (kWh) for electricity or gas.
For microbusinesses, the indirect commission received by brokers must be explicitly included within the written terms a supplier sends you. This information must be presented as a total cost in pounds and pence.
Source: Ofgem – TPI’s – what your microbusiness needs to know.
To understand exactly what to look out for, here’s an extract of the relevant section of a business energy contract:
An extract of a business energy contract brokered by AquaSwitch.
The broker’s commission may not be explicitly stated within your contract for medium and large companies. However, we strongly recommend inquiring about this with your business energy broker before finalising your contract.
Is using a business energy broker right for you?
Although the services of a business energy broker are indirectly paid for, they often save their customers substantial amounts of money by sourcing the most competitive quotes.
This effectiveness was highlighted in a 2021 report by the Department for Business, Energy and Industrial Strategy, which found that most SMEs utilise business energy brokers.
Besides monetary savings, here are three additional advantages of using a business energy broker:
Save yourself time collecting quotes
Requesting business energy quotes directly from suppliers typically involves lengthy calls with sales representatives, a process that will need repeating to get multiple quotes. Allowing a broker to handle this tedious administrative work can save you significant time.
Let an expert handle your switch
The process of switching business energy suppliers can be fraught with difficulties. As well as drafting and reviewing your contracts, a broker will help resolve any transfer objections that may arise during the switching process.
Avoid expensive deemed rates
A business energy broker will keep track of all the contract end dates and termination windows associated with your business energy contracts, helping your company avoid the trap of needlessly expensive rollover contract rates.
Key information before speaking with a business energy broker
Whether you opt to work with a business energy broker or engage directly with suppliers, the following information is essential for arranging a business energy contract:
- Business site address – The first question all business energy brokers will ask is your property address and which energy services you use. Business energy contracts are associated with specific site addresses. Getting the addresses of your company’s sites and the electricity and gas services they use is the starting point of the process.
- MPAN/MPRNs – In the UK, each gas and electricity supply point has a unique identifier, MPAN for electricity or MPRN for gas. These identifiers are essential for the process of obtaining bespoke quotes for your energy supplies. If you cannot locate these yourself, your broker can assist in this search.
- Current contract status and end dates – In typical business energy contracts, you’ll need to pay an onerous exit fee to terminate early. Your business energy broker will need to know the end of your current contracts so that quotes can be arranged to start on the end date of your current contract.
- Estimated annual consumption – Business energy quotes are based on a combination of standing charges and rates per kWh of energy used. To secure the most cost-effective deal, it is necessary to have an estimate of your expected annual electricity and gas consumption.
Choosing the right business energy broker
Numerous business energy brokers are vying to offer you their services. Here are three key questions to ask your broker when choosing who to work with:
1. Which suppliers do you work with?
There are hundreds of licenced business energy suppliers, and no broker offers a whole market comparison service. It’s advisable to ask your broker for a list of the suppliers that they work with.
2. What services will you provide after the switch?
The most effective energy brokers offer year-round support to your business, offering advice as the market for business electricity prices and business gas rates change.
3. How much commission will you earn?
It is important to inquire upfront about the commission your business energy broker will receive. Although these costs are not paid directly by your business, they are incorporated into your energy rates.
Business energy brokers – FAQs
Our business energy experts answer those commonly asked questions regarding business energy brokers.
Should I choose a business energy broker or an energy consultant
An energy consultant is a viable option for businesses that consume large quantities of electricity. Unlike a broker, an energy consultant will charge your business directly for their services, which may result in higher costs. However, they offer several benefits beyond those provided by a broker, including:
- A Genuine Whole-of-Market View: Since they do not rely on commissions from specific suppliers, energy consultants can offer an unbiased overview of your energy options.
- Direct Advice on Reducing Consumption: They can provide tailored advice on lowering your business energy consumption and bills, utilising business energy monitoring software.
- Continuous Bureau Services: Energy consultants can offer ongoing services to validate all the business energy bills your company receives, ensuring accuracy and efficiency.
Are business energy brokers accredited?
Business energy brokers are accredited by the Energy Ombudsman. The Energy Ombudsman is approved by Ofgem to impartially handle disputes between customers, brokers and energy suppliers.
The Energy Ombudsman provides a broker search function on their website that you can use to check that your energy broker is accredited. Here’s a link to the AquaSwitch page on the Energy Ombudsman website.
Ofgem does not specifically license business energy brokers but has published a set of voluntary principles they should follow. Ofgem does pursue brokers in cases of breaches of misleading marketing practices under consumer protection laws.
How many energy brokers are there in the UK?
There are currently 1,995 accredited business energy brokers in the UK. These brokers are listed on the Ombudsman Services website, where you can conduct a search to verify the accreditation of the energy broker you are considering.
Source: Energy Ombudsman – Energy Brokers Register, downloaded December 2023.
Do businesses have to sign a contract with an energy broker?
Yes, in order for a business energy broker to help arrange for a new business energy contract, it’s necessary to sign a letter of authority (LOA).
While the LOA does not obligate your business to pay any brokerage fees, it is a legal document that authorises the broker to communicate with business energy suppliers on your behalf. This authorisation is a crucial component of the quotation, negotiation, and switching processes.
For more detailed information, please refer to our guide on the Letter of Authority.
Can businesses negotiate directly with energy suppliers without a broker?
Yes absolutely. It’s possible to request business energy quotes from business energy suppliers directly. There are over 100 licensed suppliers in the UK, so we recommend reading our guides to business energy and business gas suppliers to choose the best suppliers to negotiate with.
Alternatively, using an online business energy comparison service, you can quickly and easily get quotes from across the market.
Do energy brokers work with businesses of all sizes?
Business energy brokers specialise in helping the end needs of SMEs. Large business energy users typically opt to work with an energy consultant rather than a broker; industrial users may even have this function in-house.