What You Need To Know Before Buying Energy From A Broker/Third Party

As we move to a world where technology increasing gains ground on our lives and get’s deeper into our homes and businesses, all industry’s are forever changing, at rapid paces. The Energy industry is no different. There are plans already in motion to make every meter in the UK automatically submit meter readings every 30 minutes, make of that what you will. There are also plans to bring about next day switching of suppliers. Not to mention thousands of microgrids being set up around the country using renewable energy.

With all these changes comes more complications and problems. As a business owner you might be thinking;

“I have enough on my plate, I’ll just let Tom, Dick & Harry deal with it, they called me and offered to do my energy for me.”

This is a perfectly valid thought and one that I hope many more people have, however, there’s one problem with that. Gas and Electricity when it goes well is a topic that is irrelevant, it means nothing, it has to be paid and who cares who suppliers the energy. However, when there are problems, then there are real problems. Thousands of businesses get disconnected and have their energy shut off, meaning business closure. It shouldn’t be taken lightly and picking someone to deal with your energy shouldn’t be taken lightly either.

There are questions to ask while looking to buy your energy from a third party. That’s what you’re doing, you’re buying from a third party intermediary.

As the energy market becomes more complicated with new regulations, additional fees, and even price increases (fines if you exceed the energy consumption limits put in your contract by more than X%), carbon commitment reductions and prices that fluctuate just like stocks – you will need a reliable energy broker. Or of course you could do it yourself, I wouldn’t advise it though.

It has never been so challenging to maintain as well as control the energy costs of our business. And this has highlighted the need for an independent energy broker. Here I’ll attempt to outline some of the pros and cons of working with a broker as well as some of the questions that you must ask before agreeing to anything.

picking an energy broker

Let’s Start With The Cons Shall We?

Cost

You’re paying them. People don’t work for free, well most don’t. Third parties charge in various different ways, I won’t go into them here but you can expect that you’ll be paying a fee one way or another towards them.

Handing Over Authority

You’re giving them control/authority. Even if you don’t sign a letter of authority, you’re still handing over control to them by agreeing to a contract with the supplier. You’re essentially using them as a messenger between the supplier and yourself. Messages can get damaged, delayed or lost. Which does happen, a lot.

Honesty Chance

They’re human, some humans are truthful, some aren’t. You’re taking a chance that the person you’re dealing with is honest. I generally believe that most people are truthful, however, salespeople under pressure tend to bend or conceal the truth more than they would outside of their work. Just a tip for you, the more desperate the salesperson is, the more likely they are to bend the truth or hide the flaws.

The Pestering

Salespeople are known to pester people, with many phone calls, emails, and texts. Third-party brokers are no different. Once you’re in, you’re in! Obviously, you can stop working with a broker whenever you want but you can’t guarantee that broker company won’t; 1. Contact you multiple times a year 2. The agent won’t keep your details and contact you at a different company 3. Sell your information to another company. Unfortunately, these things happen and it’s the cost of doing business. If you can, work amongst a few brokers, maybe 2 or 3. If you get in touch with 5 brokers, you may well have 5-10 agents of those brokers contacting you each year, then on top of that, your current supplier plus your previous suppliers. This is how people end up with 24 phone calls a year, all about gas and electric, from 5 brokers and 3 suppliers.

broker at a desk

Now For The Benefits

If you’re still reading, I commend you. I’m glad the negatives didn’t put you off. Everything in life has its pros and cons. Here are some of the upsides to working with a Broker.

Multiple Options

Energy broker help many companies find the best option concerning energy prices from reliable energy providers. Most brokers work with multiple energy suppliers, allowing them to explore specific energy supply options for businesses. These range from the cheapest suppliers, the most customer service friendly suppliers, suppliers who can use smart meters, suppliers who accept low credit customers, suppliers who allow cash and cheque payments, supplier who offer 100% renewable energy, suppliers who can install new meters – the list is endless. If you have specific needs, I strongly recommend using a broker who can help you meet those needs. Otherwise, you’re going to have to batter the phones in trying to find suppliers that will offer you what you need. On top of that, you have the added issue that many suppliers will say they can offer that need, and then not.

Other Needs

Outside of simply agreeing to a new contract for your energy supply, energy brokers can help businesses of all sizes buying business energy, cut down their energy costs by improving their business energy efficiency and reducing their carbon footprint. For many large businesses, they face big governmental fines for having a large carbon footprint and so having a broker to aid them in this could be invaluable. Brokers can also help you in understanding whether to change your meter to a two-rate meter or to stick with a single rate. Many brokers know people who can help with the transition from being an energy consumer to being an energy generator (i.e wind/solar.)

Timing

Energy brokers can help businesses save money on their energy bills by just advising them regarding the time to take out a contract. Energy brokers help make informed purchasing decisions as to whether it’s a good idea to finalize your gas contract now during the coldest winter in the last 10 years or whether it’s advisable to wait for the gas prices to drop in the coming weeks.

One of the best ways to deal with things is to analyze the upside and downside, compare them and decide is it worth it. If you decide it’s worth it to deal with Third Parties and Brokers, then work out a strategy to deal with the negatives that they come with.

What businesses genuinely need an energy broker?

As to whether you NEED a broker is debatable. You could do it yourself or allocate the task to one of your staff members to go direct to suppliers. I don’t believe any company needs to work with a third party however, I strongly recommend it. As long as you protect yourself and you take measures to ensure your once “really cheap” brokers isn’t now three years later taking you for a donkey ride – you’ll be a lot better off with a broker.

questions6 Questions To Ask

So how do you protect yourself when potentially you get so many different calls and requests from brokers and consultants wanting you to work with them. Before you indulge any phone calls with any third parties consider if you have enough on your plate. If you already have 2 or 3 brokers that compete with each other, don’t indulge anymore. If you work with one broker, and they’ve done an outstanding job, for example, if they’ve absolutely saved you big time, don’t upset them by taking on any more brokers. If you’re happy, perhaps it’s best to stay happy.

If you are prepared to take on more brokers or if you want to replace your current broker, then here are some questions to ask any new third party you’re looking to take on;

1. Will I Get Transparency?

Ask the company or person you are dealing with if they are transparent with their customers. Do they let their customers know what their commission is if requested? Do they discuss with the client first before taking action on the account, for example before terminating the current contract or requesting a copy of a bill. Most brokers will answer yes to this question but you can judge for yourself if they’re telling the truth based on their tone of voice. Many will be thrown back by you asking.

2. Do You Have Favoured Suppliers Or Targets To Hit With Specific Suppliers?

Many of the small brokers have specific targets to hit. I.e. EON want 25 sales a month from them. Or for example, Gazprom is offering £30 extra commission for all sales the brokerage does over 50. You can imagine if a brokerage has these kinds of targets, why it might be difficult for them to suggest switching to a Supplier B when they know they’ll get extra money if they put you with Supplier A.

3. How’s Your Companys Reputation?

Picking a company with a great reputation is always generally a safe bet. When you ask a salesperson, “how is your company’s reputation?” – this is a chance for them to brag about what others have said about them. If they stall and can’t really say anything, then you should take that as an indication that they know something bad and they can’t tell you. If they’ve won “Best Energy Broker of 2017”, you’ll hear about it from them pretty quickly. If you’re unsure by their response you can always give them a google and check their reviews.

4. How Much Experience Do You Have In The Market?

We are all new at one point but do you really want to put your business energy and your finances in the hands of someone who’s just started? It’s possible that you have more experience in dealing with energy suppliers than the broker you’re speaking to. Some people may not mind working with someone with little experience but then they must expect mistakes. Even experience brokers make mistakes and slip up but you can guarantee a newbie will slip up a lot more. 2 years experience at least is what you should aim for.

5. How Much Do You Charge Me & How Do You Get Paid?

You ultimately don’t care how they get paid but it’s always good to see if you’re dealing with an open and honest person. A dodgy salesperson would panic and probably beat around the bush. You should, however, make sure you know how much they intend on charging you. Ideally, you want to go with a Broker that won’t charge you anything.

6. Where Are You Based?

It’s not really relevant but again it will help you put your heart at ease, make you feel like you know that person and again it just allows you to paint a better picture in your head of this broker. If the broker is based in the center of London, they’re probably doing really well for themselves.

Final Thoughts

Of course, not all energy brokers or consultants are equal, and it is important to first figure out what you want from a Broker. If you want minimal contact with minimal fuss don’t contact 5 brokers. If you want absolutely the cheapest price and are willing to do anything to get it, then get in touch with 5 brokers and get them to compete with one another.

Bookmark this article and the next time someone sends you an email asking to do your energy, give this a quick read over. Be prepared and don’t assume everyone is nice, bottom line is; most people just care about the bottom line.

happy broker