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The Energy Broker – Your Secret Weapon to Slash Business Energy Costs

Introduction

In today’s challenging economic environment, business owners are constantly looking for new ways to reduce costs and improve bottom lines. One area ripe for savings is business energy expenditures, which often represent a major cost center. While many companies attempt to negotiate business energy contracts directly with suppliers, they may be missing out on huge savings by not leveraging the skills of an energy broker. Read on to learn how an energy broker can transform your business energy costs.

Key Takeaways

  • Energy brokers have expertise in procurement and are skilled negotiators, securing optimal contracts on your behalf
  • They provide objective, unbiased advice, finding the best solutions for your unique business needs
  • Energy brokers access better pricing and contracts than most businesses could obtain directly 
  • They handle the entire procurement process for you, saving time and effort trying to self-manage energy
  • Energy brokers monitor the market daily, alerting you to savings opportunities as they arise

How Do Energy Brokers Save Your Business Money?

Energy brokers are essentially procurement experts, specialised in business energy purchasing. They act as an intermediary between your company and energy suppliers. While you may think this middleman would raise your costs, the opposite is true. Reputable energy brokers provide several valuable services that can lead to considerable savings:

Skilled Negotiators:

Energy contracts can be complex, involving detailed rate structures, rebates, and incentives. Brokers possess deep expertise in this arena and are savvy negotiators. They leverage their market knowledge and bulk purchasing power to negotiate optimal pricing and terms for your business. This expertise results in contracts that balance cost minimization and risk mitigation.

Market Insights:

The energy market is complex and dynamic, with constant fluctuations in wholesale pricing. Brokers monitor the market daily, tracking key indicators that influence rates. They understand how to time contract signings to capitalize on downturns in pricing cycles. With their ear to the ground on market shifts, they can alert you to opportunities for savings as conditions change.

Unbiased Advice:

As independent third parties, brokers provide unbiased guidance on choosing energy solutions tailored to your business needs. With no affiliation to specific suppliers, they objectively evaluate your usage patterns and risk factors. This enables them to match you with suppliers and contract terms that make the most financial sense.

Administrative Burden Reduction:

Energy procurement involves data gathering, technical analysis, contract negotiations and paperwork. By handling this entire process for you, brokers save your staff significant time and effort. This allows your team to stay focused on core operations rather than energy management.

Ongoing Cost Optimization:

The job of a broker doesn’t end once your contract is signed. They monitor your account over time and recommend optimizations that can further reduce your energy spend. This may include adjusting usage to achieve better rates, identifying billing errors, and advising on rate changes or supplier switches when cost-saving opportunities arise.

How Does an Energy Broker Get Paid?

Some business owners mistakenly believe that engaging an energy broker will raise their costs. In fact, reputable brokers utilize a “supplier-pay” model so their services cost you absolutely nothing. 

These brokers are paid directly by energy suppliers through commissions. Suppliers are willing to pay these commissions because brokers drive high-volume business their way through expert procurement. This supplier-pay model ensures the interests of the broker are 100% aligned with the customer. Their goal is to negotiate the lowest possible rates on your behalf to earn your business and maximize their commission.

What Should You Look for in an Energy Broker?

Not all energy brokers are created equal. Be selective in choosing a broker to maximize savings and avoid disappointment. Key attributes to seek include:

– Years of experience specific to business energy procurement 

– Existing relationships with multiple suppliers to drive competitive tension

– A supplier-pay model to ensure impartiality and zero cost to your company

– Strong negotiating skills to secure optimal contract terms and pricing

– Ongoing account management and monitoring for cost optimization over time

– Proven track record of savings – ask for case studies and client references

– Membership in trusted industry associations like the Utilities Intermediaries Association (UIA)

Follow a staged, competitive procurement process when selecting your broker rather than going with the first one you speak to. Outline clear expectations, get proposals from multiple brokers, and vet their experience, pricing models, and client references. This due diligence will lead you to the right partner. One of the reputable energy brokers is Energy Action.

FAQs on Partnering With an Energy Broker

Still unsure about the value of engaging an energy broker? Here we address some common questions business owners have:

How much could I realistically save on business energy costs by using a broker?

Savings vary based on factors like your type of business, size, usage levels and current rates. However, a broker typically achieves 10-22% savings off the rates you could secure directly from suppliers. For a business spending $100,000 a year on energy, this could mean $10,000 to $22,000 in annual savings via the broker.

What energy solutions can a broker help procure?

Brokers can source and negotiate competitive contracts for all your business energy needs including:

– Electricity

– Natural gas

– Solar or renewable energy options

– Risk management services like caps and hedges

Brokers work with an array of suppliers so they can compare multiple contract structures and rates to find you the most cost-effective solution.

Is it better to have brokers bid through my current energy provider or cast a wider net? 

Your existing provider is unlikely to offer their best rates and incentives to an existing customer. Brokers thrive on competitive tension between suppliers vying for your business. Casting a wider net across a broad supplier ecosystem almost always results in far better pricing due to this competition. 

Can brokers help if I’m locked into a long-term contract my business wants to exit?

If your business is stuck in a costly long-term contract but needs the flexibility to switch suppliers, a broker can help negotiate an early exit. Their relationships with providers give them leverage in waiving termination fees or negotiating mutual settlement agreements. This can unlock huge savings by escaping a legacy contract prematurely.

How quickly can a broker start saving me money on energy?

Brokers can typically identify savings opportunities and negotiate improved rates for your business within 30-60 days of engagement. The time frame depends on the term remaining on your current contracts but a broker can act fast when needed to capitalize on expiring legacy energy agreements.

Conclusion:

An energy broker could be the secret weapon you need to finally tackle runaway business energy costs. By leveraging their purchasing expertise, market knowledge and negotiating muscle, brokers can secure pricing, contracts and incentives beyond the reach of an individual business. And they do this at no direct cost to you through the supplier-pay model. Partnering with an energy broker is a proven way to realize substantial savings – so your only regret may be not starting sooner. Contact a qualified broker today for a consultation to map your path towards energy cost optimization.

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