A commercial energy broker — and all energy brokers — act as intermediaries between customers and energy suppliers.
Many companies employ energy brokers to look for competitive business energy rates that will help reduce their energy bills. But commercial energy brokers are much more than just deal seekers.
Energy brokers can help everyone in the energy chain, from business owners to homeowners to natural gas and electricity providers. Let’s investigate what energy brokers do within the energy market and how their role could help you.
What Is a Commercial Energy Broker?
Think of a commercial energy broker as an energy consultant. They act as an intermediary between energy suppliers and natural gas and electricity customers. Essentially, they shop around to find the best energy deal, so you don’t have to.
An energy broker doesn’t generate or distribute energy, and they can’t sell it to you directly. A good energy broker will understand their local energy industry and find the right energy plan for your circumstance. They listen to your energy needs and provide suitable products from wholesalers and suppliers.
A helpful analogy is to think about a real estate agent. They don’t own the properties they sell but they help people navigate the system by matching buyers and sellers. A commercial energy broker does the same, looking for energy solutions for both customers and energy providers. They work with many energy providers to offer various energy rates.
Who Needs a Commercial Energy Broker?
All businesses that pay utility bills could contract an energy broker, especially those with high energy usage.
Energy brokers with years of experience should know the commercial electricity and gas markets thoroughly. That means they can find the best energy contracts to suit your company. That could be finding low renewable energy electricity prices for firms that want to advocate sustainable practices.
Energy companies also need energy brokers because they help reach customers they may otherwise have missed out on.
What’s the Difference Between an Energy Broker and an Energy Consultant?
An energy broker is an intermediary between energy suppliers and customers. They have multiple contacts within the energy industry and will present firms with various solutions to their energy costs. There are commercial and residential energy brokers specializing in their respective fields.
Conversely, an energy consultant reviews a company’s energy management and usage. They charge a fee to look at a firm’s energy efficiency and recommend how to reduce energy costs. That could include looking for a cheaper energy rate via an energy broker.
Should I Use an Independent Energy Broker or a Brokerage Firm?
There are independent energy brokers and large energy brokerage firms.
A small, one-person independent energy broker may not have the sway a large company requires to get the best deals. Their industry knowledge may suit smaller firms.
Large energy brokerage firms carry weight in the energy market and most likely have long-lasting partnerships with many suppliers. These brokerage firms usually assign customers an account manager to oversee their energy needs. Their energy procurement power may suit heavy energy users like large businesses and smaller and medium-sized businesses.
How Do Commercial Energy Brokers Make Money?
Commercial energy brokers usually receive a commission from energy suppliers for the customers they contract. This could be a one-off payment for a referral or a percentage of the energy each customer uses.
Commercial energy brokers can have many customers, making their trade important to energy suppliers. A good commercial energy broker with many customers holds some sway over these suppliers, often translating into lower prices for clients than they may find directly.
There are specialty natural gas and electricity brokers, so hire the correct type. Also, ensure that your energy broker works with multiple energy suppliers. That means they are scouring more of the market for better deals.
Why Should I Use a Commercial Energy Broker?
Energy brokers operate in states that have energy deregulation. Anyone can use a broker in these regions, from homeowners to small businesses to large industrial factories. Hospitals, restaurants, car washes, and manufacturers are among the many companies that might use an energy broker.
Businesses are accustomed to using brokers for large purchases, real estate agents for properties, or insurance brokers for health insurance. Energy brokers do the same but for business electricity.
A good broker understands the local energy market and will advise about switching suppliers, trying to negotiate a better deal, or adding in renewable energy. They could save a company thousands of dollars on their energy bills. This could be a lifesaver for a new business or those whose margins have been squeezed by rising energy prices.
Of course, every business is different with unique energy needs. For that reason, most energy companies don’t advertise business energy rates. A commercial energy broker will gather many quotes on your behalf and present a range of prices in one bundle, all tailored to your requirements. That saves your company putting in the legwork.
Energy brokers offer one point of contact before and after any sale and also understand the rules and regulations in your state. Inside knowledge is critical when negotiating energy rates.
In Which States Do Commercial Energy Brokers Operate?
There are 30 states with some form of energy deregulation, each slightly different. Some have natural gas and electricity deregulated, and others have just one of those open to the market.
Furthermore, in some states, deregulation only applies to commerce and industry or residential customers, while others offer a mix. For example, the electricity market in Texas is fully deregulated for residential and business customers. However, natural gas deregulation is available for commercial and industrial consumers only.
Here are all 30 U.S. states with some form of energy deregulation:
- California
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Illinois
- Indiana
- Kansas
- Kentucky
- Maine
- Maryland
- Massachusetts
- Michigan
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New York
- Ohio
- Oregon
- Pennsylvania
- Rhode Island
- South Dakota
- Tennessee
- Texas
- Virginia
- Washington DC
- Wisconsin
Are Commercial Energy Brokers Licensed?
Most deregulated states require energy brokers to apply for a license to allow them to market electricity or natural gas. A state’s Public Utility Commission (PUC) usually issues this license.
For example, in Texas, the Public Utility Commission of Texas (PUCT) requires all independent energy brokers and energy brokerage firms to have a license. However, employees of energy brokerage firms do not require a license; just the firm does.
Note that there are more than 1,400 licensed brokers in Texas. Check their credentials, like qualifications and customer reviews, before committing.
In Texas, companies that sell electricity are called retail electricity providers, or REPs. Tellingly, these REPs cannot become energy brokers. This stops any conflict of interest and means energy brokers give independent energy advice.
Always check if a license is required in your state. If the answer is yes, then only work with a licensed energy broker and check their qualifications and reviews.
Commercial Energy Brokers vs. Residential Energy Brokers
The roles of commercial and residential energy brokers overlap, but they follow different business models.
A commercial energy broker looks for the best rates and bespoke solutions for heavy energy users like businesses. Conversely, a residential energy broker offers electric and natural gas products to residential customers with much lower energy demands. There’s less money involved with each residential energy contract and, therefore, less commission paid to the broker.
For that reason, residential energy brokers must have many sales and accounts. They rely on more “off-the-peg” sales solutions to people’s energy needs. That’s why, in deregulated energy markets, you’ll see a wide range of products advertised at different prices.
What Is a Residential Energy Broker?
A residential energy broker may have an office or set up a stall in a market. They might go door-to-door looking for customers or use tele-sales to try to convince people to switch their energy suppliers.
Price comparison websites, like EnergySavings.com in Texas, are also residential energy brokers. Remember, for residential customers, the Lone Star state has deregulation for electricity only. The Energy Savings website offers tailored business electricity plans requiring companies to get in touch and get a quote from an energy broker.
This price comparison website also offers a wide range of residential electricity deals from many Texas electric companies. EnergySavings.com is just one of many price comparison websites or energy brokers that advertise the best electricity rates to people who want to reduce their electricity bills.
How Do Residential Energy Brokers Work?
Good residential energy brokers will consider your energy usage and needs and match those with the most appropriate product. For example, some deals with free electricity during evenings and weekends may be perfect for electric car owners.
Some residential energy brokers are active in trying to get you to switch suppliers over the phone or in person. Others are passive, such as price comparison websites inviting you to enter your details and peruse their offers.
In both cases, if you sign up, the residential energy broker acts as an intermediary between a person and an electric company. They send your details to the energy supplier and arrange for you to switch providers. Once connected, the brokers receive a commission or a percentage of the new customer’s energy bill from the electricity supplier.
Signing a contract is binding, so read all the details, prices, and conditions.
Why Should I Use a Residential Energy Broker?
In Texas, almost 140 electric retail electricity providers are offering a multitude of deals. Checking every offer would take a very long time.
Residential energy brokers like EnergySavings.com take your energy usage figures to look for the most suitable deals. They filter through all the options to compare suppliers and make switching more straightforward and give greater choices.
There may be incentives like bill credits, free smart thermostats, or switching to 100% renewable energy. Many price comparison websites will also show an estimated monthly bill to compare offers to your current utility bill.
How Much Does a Commercial Energy Broker Earn?
An energy broker in the United States typically earns an average of around $68,000 a year. Top earners can reach six-digit salaries of approximately $115,000 a year.
Interestingly, Houston in Texas is where energy brokers earn the most, with average annual salaries of around $75,064.
What Are the Skills Needed to Be an Energy Broker?
Energy brokers need to be critical thinkers who can apply logic to problems. Their role is to match a customer’s energy requirements and budget with offers in the energy market. For that, they’ll need to be good listeners, conveyers of information, and have good math skills. Sound judgment helps an energy broker guide clients to decisions.
Energy brokers must keep abreast of energy market trends, understand new products coming online, and prepare legible quotes for potential customers. The ability to analyze prices and costs is crucial.
Commercial Energy Brokers: Helping Business Save Money
Reputable commercial and residential energy brokers exist to reduce energy bills in states with deregulated energy markets.
Effective commercial energy brokers know their local energy conditions inside out. They should listen to your firm’s energy usage and work hard to find you a fantastic deal your business might not have seen. As most services do, they take a commission or a fee for their work and are on-call to help with any ongoing energy queries. Ultimately, a commercial energy broker with years of experience should be able to improve a company’s bottom line.
Similarly, a licensed and reputable residential energy broker can help customers save money on utility bills. Switching suppliers can be quick and beneficial so it’s always worth asking.
Brought to you by amigoenergy
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