Do you have a transparent energy broker?
Helping Ohio businesses navigate energy costs for over a decade
Do you know what really grinds my gears?
Anytime business owners don’t get the best
power deal they can…ESPECIALLY during such
a challenging time.
Using a third-party broker, consultant or energy manager when you’re looking to switch energy suppliers or renew an energy contract can be beneficial, but also may have its risks. Let’s walk through some of the general pitfalls.
In this article, we will walk through a few principles that will help ensure that if you use a third-party broker, they are being transparent in comparing energy plans on your behalf. I’ll share a real story of how a customer almost overpaid by $26,000.00 on their Ohio energy rates.
You may not know
Third-party Energy Brokers Are Not Free
Most often, we find that broker fees are simply not being shown to the customer and are just included in the overall pricing presented to customers. Businesses that strive for the lowest cost on commercial energy usually don’t have the time to compare energy rates on their own, let alone ensure that their broker is giving them all the details. The broker might find what appears to be a sweet deal, but they might NOT choose to pass on all of the savings.
When comparing your electricity rates, the broker runs your numbers and says:
“Hey, congrats, I got you an energy renewal deal at 5.4 ¢/kWh”
The broker looks like a HERO, but the customer has no idea there was better pricing available.
understanding broker fees
Lets breakdown why it’s so important to understand broker fees
In this example below, let’s assume the broker received the same price from a supplier that we did:
The broker knows that they only need to beat 5.8 ¢/kWh to look like they are getting you the best deal.
For this example we assumed that the broker received the same pricing from the energy supplier at 4.7 ¢/kWh
Since no fee has been discussed they had the potential to be able to add 0.7 ¢/kWh to the energy supplier price and show you a price of 5.4 ¢/kWh.
You are happy to be able to lower your energy costs by the 0.4¢/kWh but in reality, you should have saved 0.9 ¢/kWh buy knowing and agreeing to a fair and transparent fee of 0.2 ¢/kWh for the broker.
The broker pockets YOUR savings and you are none the wiser because they never disclosed the fees.
This essentially takes potential savings out of your business’s pocket and puts them in the broker’s…all while you are made to believe they saved the day. Make sure to push your broker to give you a detailed apples-to-apples energy comparison before you make the choice to renew your energy supplier or sign a new energy contract.
Alright Jess, that’s great, but how could overlooking these things cost a business $26K on their energy bill?
I just worked with a customer that had worked with an energy broker for their previous energy contract. This is a company that was working really hard to make every dollar count, and as a result, they wanted to be sure that they were seeing the best Ohio energy plans possible. The broker had not only been a friend of an employee, but they even went to church together! Due to the close relationship, no research on the brokerage had been done.
The broker did not disclose:
Any of the actual suppliers' quotes
meaning the customer didn’t know WHAT the actual prices were or who any of the suppliers were. If you ever get an Ohio energy comparison from a broker, make sure it’s clearly listing the actual electricity suppliers. It’s nearly impossible to make a fair price comparison of business electricity rates without a clear understanding of who the suppliers are.
Any of their fees
just simply added them onto the offered supplier prices. We will never know what he was charging the customer, but we do know we beat the prices he was showing them by more than 0.4 ¢/kWh. By working with Breakerbox, this customer was able to lower their energy costs by another 10%.
The change in market prices from year to year
In this case, Ohio energy prices had been coming down since their previous contract was signed – so the energy price comparison was not apples to apples. It’s easy for brokers to mislead customers by getting them to think that they are getting a better deal just by showing them a lower price, when in reality the best price may have never been offered to them at all.
We would be able to cut their energy costs by
What we did to fix it…
In talking with the customer, we learned that the broker had said their industrial energy contract was due for renewal this June. It was actually June of 2021! Feeling something was off, the customer requested a full analysis from Breakerbox (which is always free, hit us up!). They were FLOORED when they saw the transparent electricity comparison.
How did Breakerbox accomplish this?
I spoke with this customer many times and explained all the parts of the contract along with the different pricing options and was upfront with our fee of 0.2 ¢/kWh (roughly 40% below industry average). The customer’s response was, “Wow, I had no idea!”
When all was said and done, and after including all the accounts the business was using, we were able to reduce their energy costs by $26,000 per year from their previous contract!
$6,000.00 alone was saved purely on broker fees and $20,000.00 was saved by choosing the right energy plan from the right supplier, for the right term, with the right contract details. Included in this detailed analysis were all yearly savings for all terms and price offers. The customer was ecstatic we were able to do this for them. It was easy for them to trust me because everything was clearly explained and laid out in the open.
I am born and bred in Ohio and am with getting my customers the best energy deals in Ohio transparency and facts. If you are looking to switch suppliers and are unsure if you’re getting the best Ohio electric rates I will always be happy to run your numbers at no cost to you so you have a clear view of the facts.
Until next time…
$6,000.00 was saved purely on broker fees and $20,000.00 was saved by choosing the right energy plan from the right supplier, for the right term, with the right contract details.
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