I never knew that these were the questions I SHOULD be asking my broker
Businesses, now more than ever, are needing to consider areas where they can save money and reduce their expenses. The more money your business saves, the more you can invest back into your passion, rather than wasting it on utilities which could be cheaper. So, finding ways to reduce your expenditure is critical.
An energy broker’s job is to help you understand your businesses’ utility bills and prevent you from overspending or inefficiently using the energy you are paying for. Brokers are experts in the energy field and will advise you on the best options for your needs, and for your business.
In fact, did you know that by using brokers your energy bills actually get cheaper? Brokerages mean that suppliers have to compete for your business because now you are making informed choices and so they cannot lure you into deals or tariffs which will cost you unnecessary money. This results in more suppliers advertising tariffs at competitive prices – so by helping yourself, you also help your future self pay even less.
Brokers also offer services such as:
- Ensuring that you are only paying for what you need,
- Explaining your contract jargon to you, and
- Advise you on legal and contractual obligations your business may be affected by.
However, whilst it is a great idea to use a broker, we know that the brokerage world is a crowded one. Not all energy brokers work in the same way nor govern themselves by the same ethos. Brokers are not overseen by Ofgem in the same way that suppliers are, so there are some dodgy brokers to be mindful of in the business.
At Niccolo, we only work with the best brokers out there, those who will continue our high standard of customer service to their customers. This guide will help you to understand the right questions you should ask your broker.
Asking the right questions might just save you time, money, and a lot of hassle by making sure you have selected the right brokerage BEFORE signing up.
Question One – How do you charge for your service?
Energy brokers charge in many different ways:
- Some charge for their services directly,
- Some take a percentage of the costs saved from brokers as commission,
and those are only two common ways; there is a lot of variety. It is important that you know how your broker will ‘pay themselves’ in order to ensure that the service you are getting is value for money. If their offered services seem a little steep for their asking price, then perhaps the broker is taking too much commission from the wrong area.
A reputable broker will explain how much their services cost and how they are paid very clearly; if something seems sketchy or like it is being hidden then beware of potentially misleading offers.
Brokers should be transparent.
If you are being led to believe that the service offered by the broker is free or that the supplier is paying the broker then do not sign a contract with them; if they are lying now you do not want to wait to find out what else they may be hiding. Some brokers may refer to their commission as just a vague ‘small percentage’ – this is another red flag! As a business you will likely be spending big on your energy, so a small percentage can be a large amount of money you are being scammed out of.
Question Two – What makes you my best option?
Brokerages can be opened by anybody so there are always new ones appearing in the market. Some may be large organisations, and some will be self-employed individuals on their own. Whilst neither of these nor those in between determine the reputation nor ability of the broker, it is important to choose a company that demonstrates a clear ability to do their job and to do it well. Go with a company you trust, who have a good reputation, and who works hard to establish a beneficial and positive working relationship with you.
Here is a brief checklist to consider:
| How long has the energy broker been in business? | |
| Who owns the business? | |
| What relevant experience do the key people have; do they have relevant experience to support and advise your business? | |
| Do they have a thorough understanding of the UK energy market and commercial energy management? | |
| Can you read references from clients – are you able to contact them? |
If these all get strong, confident, and assured answers then you have found yourself an excellent broker to partner with!
Question Three – Do you offer a specific ‘tailor-made’ service?
It may seem obvious, but it is important that you understand precisely what services you are getting from a broker and how much it will cost you. A Service Legal Agreement (SLA) is a useful contractual document. The SLA will hold information about the details of the service being delivered, the time period of any contracts and all the associated costs. This document should also list any additional charges and the degree to which support is offered.
Each business is different. The complexities and unique elements of your business will determine the degree of support you require from your broker. This is where it is a good idea to check if the broker you are speaking to offers individual packages for business depending on your individual needs.
Some business will need their brokers to go through contracts step-by-step with them whereas others may only require the business to help find them a low price for their energy. Check your broker can, and will, offer you exactly what you need.
Understanding precisely what you are signing up for will help you avoid overspending on your brokerage service and end up stuck in an unhelpful contract for longer than you want to be.
Question Four – Will I have a dedicated account manager?
Arranging a supply contract is just the start of your relationship with your broker. Once you have signed your chosen supply contract it will be:
- Submitted to the relevant supplier, and
- Managed and monitored by the brokerage until the start date.
Once the supply has transferred to the correct supplier your broker should be available to answer your queries throughout the entire contract.
Now, this may not include bill checking and dispute resolution if you have not agreed on it with the broker. However, your broker should still respond to any queries you have about the contract.
For this reason, it is worth asking if you will be given a dedicated account manager.
An account manager is an energy expert and who will personally manage your account. Ask your broker if you will be able to reach them easily whenever you have a question or would like a face-to-face meeting. If the answer is no, then do not sign!
Question Five – How will you get to understand my energy usage?
Brokers will nearly always ask about your meters – how many, their numbers, your usage – in order for them to understand your energy usage. However, your broker should also make sure that you also understand your business’ energy usage. Whether they use the information to track usage, increase efficiency or just to find you the best deal, if they understand your usage then they should be able to make you understand it too.
Brokers who take the time to get to know your business, your usual usage, and your patterns in usage, will be able to secure you with the right meter, contract, and energy supply to cater most effectively to your needs as a business.
Your broker’s aim should be to optimise procurement and minimise the time and money spent administrating it. No broker can guarantee that they will save you money – the energy market is volatile and no one can predict what may cause price increases – however, they should work hard to understand your business fully so that they can ensure you have access to the best options possible.
Question Six – Do you have any clients in my industry sector?
Some industries are very niche and require more experienced brokers with knowledge of your individual needs. It is worth enquiring whether your energy broker has a good understanding of your particular sector, as well as the energy market and the commercial sector more generally.
This is not a deal-breaker if they say no, but it can offer you some peace of mind and help you trust your broker to know that they have dealt with needs similar to yours before.
Question Seven – What type of contracts are you able to offer?
Does your broker offer several types of contract? Some brokers will only offer the contracts which offer THEM the best deals, so it is best to shop around and check out whether any brokers are offering a tariff that is more suited to your needs and less suited to their profits. Beware of brokers who offer low prices but sneak in additional charges at billing stages.
A reputable broker should have prices from a variety of suppliers across a variety of tariffs. They should send you a summary of these along with their recommendations with their more intimate understanding of your actual usage and needs.
Different contract options can include:
| Flexible Energy Contract | These contracts are good if you are prepared to invest in a risk-managed contract, taking advantage of energy wholesale price drops. This option enables you to spread your purchasing decisions across a contract period and depending on your consumption it may be on a monthly basis. However, these contracts carry the risk of being caught in a rising market so you may end up actually paying more than the fixed price contract. These contracts require close management |
| Pass-through Contract | In these contracts, the energy costs are fixed but the third party costs are passed on from the supplier at cost. These contracts tend to be more competitive at the outset, but they often have hidden costs. Because the third-party costs (which for electricity account for 50% of billed costs) are passed to the end-user as they are charged to the supplier, there is no risk to the supplier meaning that they do not build in additional margin to cover potential rises in the costs. For the consumer though the increases in third party costs will be felt, so by the end of the contract, you might be paying more than the fixed price at the outset. These need to be thought about before entering and assessed on a case by case basis. |
| Fixed Price Contract | These speak for themselves. What you are quoted is what you will pay. Some suppliers offer variations on this where some specific costs are fixed, whereas others can be variable within a range. |
| Collective Purchasing Contracts (also known as Basket Buying Options) | These work by combining your energy consumption with another business or organisation. Doing this means you are able to benefit from lower energy costs because you are increasing your purchasing power. Buying in large supply allows you to negotiate better contract terms, flexibility and economies. |
| Green Contracts | For power, specific green contracts are available which use renewable energy. Being climate-conscious is a major business goal for many companies. It does usually cost more, unfortunately. |