FAQ: Are Energy Brokers Crooks?

Are Energy Brokers Crooks?

By AJ Brockman

Some C&I energy purchasers are wary of working with energy brokers because they’ve been burned in the past.

Prospects have expressed these fears about working with a broker:

  • “Brokers favor some suppliers over others and don’t give you ‘true’ numbers.”
  • “They don’t give you a true apples-to-apples comparison.”
  • “Brokers aren’t transparent about their costs.”
  • “They’ll make you terminate your current agreement early and leave you with thousands of dollars in early term fees.”
  • “Brokers double-dip. They’re getting paid by the supplier and still charging you a direct fee.”

Unfortunately, energy brokers are getting a bad rap due to a few bad apples. And as a result, some energy purchasers are choosing to use their local utility as their supplier.

However, not working with an energy broker could cause you to miss out on the benefits of a deregulated energy market.

“I had a terrible experience with a broker after we reviewed their rate vs. the utility. How do I know another broker won’t do the same?”

Here are a few signs that you’re working with a “good” broker:

1) They’re completely transparent with you.

Your broker should answer questions such as “How are you paid?” and “What are your costs?” without batting an eye.

2) They give you honest, straightforward pricing results.

The components included in an energy product vary by supplier.

For example: Supplier A’s “Energy Only” product could include Energy and Capacity charges. Supplier B’s “Energy Only” product could have Energy, Capacity, and Ancillaries included.

Your broker should communicate these differences to you and give you a supplier comparison that’s as apples-to-apples as possible.

Similarly, they should tell you the pros and cons of each supplier and recommend the supplier that best fits your needs — even if they don’t have the lowest rate.

3) They don’t tell you to terminate your current agreement before it expires.

A good broker will NEVER advise you to terminate your energy agreement early — even if today’s market is lower than your current rate.

Early termination fees can be detrimental to your budget and difficult to reconcile.

Your broker should only give you pricing that’s effective after your current agreement’s expiration date. And they’ll ensure that your switch to a new contract is clean and has no additional fees.

Good brokers are out there.

Don’t let one bad broker experience keep you from working with someone new. It’s important that your broker meets your energy needs and works with vetted suppliers that do the same.

Use our Advisor/Broker/Consultant Evaluation Checklist to determine if your current broker is right for you.

 

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