How do energy brokers make money?
Brokers earn commission from suppliers when they faciliate a contract between their client and an energy company. The commission is a pence per kWh (p/kWh) uplift on the unit rate, and can vary greatly from broker to broker.
Sometimes, brokers may charge a premium uplift, an hourly rate, or a fixed-price for work undertaken. This could be for additional work, such as investigating billing issues (which may require extensive analysis) or setting up new connections.
There has been much controversy surrounding the amount of uplift added by some brokers, with some unscrupulous individuals/companies charging upto 50% of the contract cost in commission!
As a result, OFGEM has made it a legal requirement for all brokers to disclose the amount of uplift they have added to a contract, disclosing how much commission is included. The commission is based on an Estimated Annual Consumption (EAC); however, the paid commission is based on actual consumption, which could be considerably more or less than what was stated on the quote.
