Should You Use Business Energy Brokers?

Learn whether or not you should use a business energy broker. Use FreePriceCompare.com’s guide below to discover whether an energy broker is right for your business.

Office overheads can be one of the most expensive costs an employer has to assume, especially if you want to be based in a competitive location like London. But it’s not just renting office space that costs money. As a business owner you have to factor in energy bills. Energy use can be a cost that’s difficult to predict and keep consistent. The challenge becomes greater as your business grows and its needs evolve.

Specialised brokers exist that are dedicated to finding energy savings. But are business energy brokers good value for money? Should you use one? Or are the commission costs not worth it? In this article, we’ll explore whether or not you should use business energy brokers to drive down operating costs, or if you’re better off making the comparisons yourself.

What is a business energy broker and why are they necessary?

A business energy broker is a third party that conducts searches and uses their contacts to negotiate the most favourable energy rates possible for companies. The broker makes money by charging a fee (either in commission or a lump sum) to your company. Business energy brokers claim that they have a unique pool of relationships and contacts that will ensure you get the best energy deal. Their exact value is the subject of debate and will depend on your business.

Micro businesses with less than ten staff members will typically end up paying more per kilowatt-hour (pKwh) of energy used than SMEs with more employees. The reason is that energy companies charge at a minimum usage level.

A business energy broker can help you to get consistently competitive rates on both gas and electric bills. Alternatively, you can invest your own time to understand business energy bills and switch to providers yourself.

Understanding business energy bills

Understanding business energy bills can be tricky. Every business needs power, usually a combination of electricity and gas. Unfortunately, prices can shift due to a range of factors, thanks largely to the laws of supply and demand.

For example, demand for energy is highest in the UK during the work day (Monday – Friday, 9am – 5pm) which increases prices. Furthermore, natural disasters or macro events like severe supply chain disruption can make energy more expensive to transport, with costs passed on to the consumer.

That being said, there are more switching services than ever which business owners can use to compare costs. Provided you don’t let your contract run down and set up internal reminders, you can make sure you switch providers to get the best deal.

Your energy bill can be broken down into three main factors:

• Standing Charge: The ‘plug-in’ fee, or how much you pay to receive energy in the first place
• Unit Rate: How much you pay per hour for the energy you use (pKwh)
• Contract End Date: When your contract with your energy supplier ends.

Note: It’s generally a good idea to switch providers before your contract runs out, as you’re likely to be charged more for staying with the same energy provider over a long period of time.

The pros and cons of using business energy brokers

Let’s look at some of the pros and cons of using business energy brokers to see if it’s the right course of action for you:

Pros

• Cheaper rates for business energy in the office: Especially as we all return to the office, at least part of the time, cheaper energy costs will matter hugely
• Less hassle: As with all brokers, the time that the broker spends searching for better deals is time you can spend elsewhere managing your business
• Keeping on top of your contract: Switching energy providers is a great way to save; a business energy broker is a great way of ensuring you’re always getting the best deal.

Cons

• Comparison tools can do the job: It’s not too time consuming to do comparison searches these days thanks to the internet
• Office managers can do the same task: If you have a dedicated office manager in your company, they could take up the work that a business energy broker would do; a broker will always over-emphasise the strength of their contacts, but there are no guarantees that they actually have better connections
• Too many energy suppliers: The sheer number of energy suppliers means that no broker can effectively compare every single one; as a result, you’re partially relying on their network of contacts and who they choose to negotiate with
• Loss of savings: Any money you save via a broker will be impacted by their fees.

The value of commercial energy brokers in the UK

Business energy brokers can be an effective way for your business to reduce overheads but it does depend on your available time and resources. Before hiring a business energy broker, it’s important to compare the services in your local area.

Understanding business energy bills doesn’t have to be overly complicated. But if your business is time poor, it could be worthwhile reducing some of your potential savings by hiring a broker to sort out your commercial energy requirements.

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