Energy broker fees: how commercial energy brokers get paid
Most business energy brokers do not send an invoice. They are paid through the price you sign, which is why the fee is easy to miss and worth working out before every renewal.
Commercial energy brokers are usually paid a commission by the supplier, built into the contract price as an adder per kWh or per therm, for every unit you use over the term. Some charge a flat monthly fee or an upfront fee instead, and a few combine both. New York requires registered energy brokers and consultants to disclose the form and amount of their compensation on the customer contract. Discovery Energy Utility Audits discloses its procurement fee in writing before any contract is signed: a fixed monthly fee or a supplier-paid commission.
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The three ways brokers are paid
| Model | How it works | What to watch |
|---|---|---|
| Supplier-paid adder (commission) | A fixed amount per kWh or therm added to the supplier's price and paid to the broker as you use energy | Grows with term and volume; may differ by supplier, which can bias the recommendation |
| Flat or monthly fee | A fee you pay the broker directly, regardless of which supplier wins | Easier to compare; check what the fee covers (RFP, renewals, bill checks) |
| Upfront or lump-sum commission | Some suppliers pay the broker the expected commission for the whole term at signing | Rewards signing longer terms; check what happens to it if a site closes |
None of these is wrong in itself. What matters is that you know the form and the amount, that the amount is the same whichever supplier you choose, and that it is reasonable for the work done.
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How to work out what your broker earns
The arithmetic is simple once you know the adder: annual usage times the adder times the number of years.
Illustrative example, not a client result
A manufacturer uses 20,000,000 kWh of electricity a year on a 36-month contract. An adder of 0.3 cents per kWh ($3 per MWh) pays the broker $60,000 a year, or $180,000 over the term. At 0.5 cents per kWh, the same contract pays $100,000 a year and $300,000 over the term. For gas, an adder of $0.05 per MMBtu on 500,000 MMBtu a year is $25,000 a year.
If you do not know your adder, ask the broker for it in writing, per unit and in dollars per year, and ask whether it is the same for every supplier in the RFP. A broker that declines to disclose it has told you something useful.
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What disclosure rules require
Disclosure rules vary by state and are tightening.
- New York. Public Service Law §66-t requires energy brokers and energy consultants to register with the Public Service Commission and to disclose their form and amount of compensation via a conspicuous statement on the contract or agreement with the customer. Where a supplier collects the broker's compensation, it must appear on the customer disclosure label. Rebates of the fee to customers are prohibited.
- Pennsylvania, Texas and Ohio. These states license, register or certify brokers (as electric generation suppliers in Pennsylvania, by registration with the Public Utility Commission in Texas, and by commission certification in Ohio), which gives customers a regulator to go to.
- Everywhere else. Even where disclosure is not required by law, nothing stops you writing it into your broker agreement. Make it a condition.
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Questions to put to any broker
What is your compensation, per unit and per year?
In writing, for each account and contract.
Is it the same for every supplier?
If not, the recommendation may follow the commission.
Is any of it paid upfront?
And what happens if a site closes or the contract ends early.
Do you charge upfront fees for audit services?
Some brokers sell bill audits too; ask how those are priced. Discovery's audits have no upfront fee.
What do we get for it?
The RFP, renewals, contract tracking, invoice checks, market reports.
Where are you licensed?
Every state where you will act for us.
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How Discovery is paid
Discovery Energy acts as an energy broker in its procurement work; its energy broker licenses and registrations are held by Energy Auction Exchange, LLC. Procurement: a fixed monthly fee or a supplier-paid commission, disclosed before any contract is signed, and the same whichever supplier wins. Audits: contingency, usually 15% to 50% of refunds and verified savings, with no upfront fee. Bill pay: priced per engagement by number of bills and complexity, with TaraBase reporting included. See pricing and independence.
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Questions about broker fees
How do energy brokers get paid?
Usually by the supplier, through an adder built into the contract price per kWh or per therm. Some charge the customer a flat or monthly fee instead, and some receive the expected commission upfront.
Do utility brokers charge upfront fees for audit services?
Some do. Ask for the fee structure in writing. Discovery Energy's utility bill audits have no upfront fee: it is paid a share of refunds and verified savings only after the client receives them.
Is a broker's commission included in my energy price?
If the supplier pays it, yes. It is part of the rate you pay for every unit, which is why it is easy to overlook.
Are broker fees regulated?
Amounts are generally not capped, but some states require registration or licensing, and New York requires disclosure of the form and amount on the customer contract.
Can I negotiate my broker's fee?
Yes. Ask for a lower adder, a flat fee, or a cap on total compensation over the term, before the RFP runs.
Sources
- New York Public Service Law §66-t, registration, disclosure of compensation and rebate prohibition for energy brokers and consultants.
- Harris Beach Murtha, New York requires energy brokers and consultants to register with the state (August 2, 2023)
- Pennsylvania Public Utility Commission, Electric Generation Supplier application resources
- Public Utility Commission of Texas, Broker registration and reporting
- Ohio Administrative Code, Chapter 4901:1-24
Find out what your bills should have cost.
Send one recent bill per site, or a list of accounts. We tell you where we expect findings before you sign anything. No upfront audit fee.