10 of the best questions you must ask your new energy broker

Energy can be one of the biggest costs for any organisation, which is why so many business leaders decide to appoint an energy broker to guide them through energy buying.

In addition to being one of the biggest costs, energy contracts are often complex and can last upwards from 2-3 years which is why choosing the right supplier for your organisation is so important.

Energy brokers are specialists, acting on behalf of customers because they know the market and are often able to negotiate a more competitive price from suppliers.

“…you need to choose the right broker who acts on your behalf, not for their own interest.”

Equally brokers are likely to be commercially incentivised and may adopt practices that favour their own business models.

Whether that’s income from suppliers through advance commission or kick-back payments which may influence which energy supplier they recommend, you need to choose the right broker who acts on your behalf, not for their own interest.

So how do you choose the right one?

If you're considering appointing an energy broker, we’ve brought together our Co-op Power experts to pinpoint 10 questions you may want to consider before making your decision:

1. As a broker, will you help me decide between a flexible or fixed price supply contract?

Your new broker should be able to advise you on the benefits of both fixed and flexible contracts and which may best suit your needs.

2. How do you decide who to send my tender to?

  • Understand the due diligence the broker conducts on suppliers (finance checks, ethical stance, current customers, transparency)
  • Understand how they align the supplier with your service requirements
  • Understand how many suppliers the broker normally tenders to and their selection criteria.

Don’t rush in.

This is a big decision which could be with you for the next 3-5 years.

3. Will my energy contract/s be put into a basket with other organisations, or will you tender my contract independently?

This will depend on your volume.

Some brokers may wish to place you in a basket with other customers, but it’s important to understand the benefits and drawbacks of joining baskets against purchasing on standalone basis.

It should be noted that if you consume below 5GWh annually and you want to purchase flexibly, you may have no other option than joining a basket arrangement.

“Think longer-term what your organisation might need in addition to buying energy.”

4. Do you offer any other services apart from energy procurement?

Think longer-term what your organisation might need in addition to buying energy.

This might include Risk Management, Bill Validation, ESOS, SECR and Energy Efficiency.

5. Do you provide regular/daily market reporting for both Gas & Electricity?

This maybe a key requirement if you wish to track or keep an eye on the markets. This may also help to judge how your broker is performing against the market.

“Don’t take for granted your new broker will provide a managed service”

6. How will you service my account?

When you’re paying a broker to service your account, its vital to know how you are managed as a customer.
Don’t take for granted your new broker will provide a managed service.

Will you be assigned a dedicated account manager, a general point of contact or will your organisation be asked to self-manage?

What reporting services will your broker provide: Trade Prices, Position Reports, Consumption Reports, etc?

Will there be a Service Level Agreement (SLAs) in place to measure both your broker and your supplier?

7. Will you be happy to sign up to the ‘TPI Code of Practice’ when introduced by Ofgem and what measures do you intend to have in place to be compliant?

OFGEM is working on a draft code outlining its plans to introduce a Code of Conduct TPI/Brokers will be governed by, making it illegal for suppliers to sell their energy through TPIs that are not accredited and compliant with the Code.

The Code will include "professional and honest behaviour, transparency of information and effective monitoring.

Under the proposal, an independent board comprising industry representatives and consumer groups will govern the Code.

The board will measure and police compliance, with OFGEM retaining the power to veto board decisions.

If you’re looking to appoint a broker, ask the question about their current Code of Conduct to get a sense of their integrity and transparency.

8. How are my fees payable to you as the broker?

Ask this so your organisation understands how the payment structure works.

Ask these questions about your fees:

  • Do you receive any fees or commissions from the supplier from placing my business?
  • Do we pay your fees paid directly, if so when am I billed (monthly, quarterly, annually)?
  • Are fees and commissions included within the unit rates?

It should be noted that if the broker fees are included within your energy rates there is no incentive on the broker to help reduce your energy consumption.

As an organisation when you are trying to evaluate your true energy costs, you need to understand the broker fees you are paying, especially if these are included within your energy rates.

Not only will separating brokers fees from energy costs enable you to clearly differentiate what you’re paying for, transparency will help you calculate any energy efficiency measures you introduce.

“…one of the frustrations you may experience is inconsistency with how fees are presented...”

9. How transparent are my fees?

When you’re assessing your choice of brokers, one of the frustrations you may experience is inconsistency with how fees are presented or in some cases not presented.

As we shared in point no.8 above, fees can be paid in a variety of ways. As an organisation when you are trying to evaluate your true energy costs, you need to understand the broker fees you are paying especially if these are included within your energy rates.

Not only will separating brokers fees from energy costs enable you to clearly differentiate what you’re paying for, transparency will help you calculate any energy efficiency measures you introduce

“By asking the supplier to confirm whether they are paying the broker fees or commissions, establishes the costs you as the customer are paying….”

10. As an independent check on my fees payable to you, confirm from the supplier what fees or commission the broker is being paid.

Question no.10 reveals the relationship between the energy supplier, the energy broker and you.

By asking the supplier to confirm whether they are paying advanced broker fees or commissions, establishes and confirms both the costs you as the customer are paying and potentially the influence the broker has on the decision where to place your energy needs.

Be careful when a broker says:

  • “It’s a free service, the supplier pays our fees”
  • “There’s no need for the supplier to confirm the brokers fees”

So whilst we know how complex energy buying can be and if there’s not the right skill in-house, appointing the right broker could be the answer to help manage your energy position.

Just make sure you ask these 10 questions to help equip you what to look out for before making this big decision.

A decision which could be with you for the next 3-5 years.

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