Power ahead: to broker or not to broker

Changes to the energy sector
Changes to the energy sector

A lot of energy companies use third-party brokers when supplying deals to customers…

However, with most brokers gaining commission from energy companies, how effective is this measure for getting the best deal? Blashill says: “We don’t use brokers or comparison sites as they are only geared towards price. Our offer will appear on the sites, but not at the top because we aren’t the cheapest. A lot of customers appreciate that what they pay for is the service, but this is something that often can’t be physically measured by websites and brokers, which tend to be price-focused.”

Of course, while brokers take a commission from any customers they sign up, going direct to companies means that this commission is removed from the cost of the energy contract once the deal has been signed. Manually finding the best energy prices by going direct to suppliers can be a time-consuming exercise and something that small teams in an SME may struggle to find the manpower for, as even going direct doesn’t always guarantee that businesses will end up with a cheaper deal.

McCarthy says: “By speaking to a broker or price comparison service you’ll get a range of prices across all suppliers and you might get a cheaper price at the end of the day, but you will have spent all day on the phone.

“There are also suppliers that small businesses may not have heard of that offer much better products at low cost rates – in fact, there are more suppliers for businesses than there are for households. In the domestic market, they often talk about the market share of the ‘big six’ dropping from 98 to 96 per cent, but in the SME market these figures are much lower – as low as 75 per cent.”

Sites such as Make it Cheaper are companies that businesses can call for utilities advice. They provide competitive prices for energy that includes larger companies as well as smaller suppliers and the service is provided for businesses of any size, whether they are working from home or have their own premises, right up to employers who spend millions of pounds a year on energy. The site has about 50,000 customers, the core of whom are micro and small businesses.

When choosing an energy supplier it is important to think of the company’s unique needs. Head of partnerships at Ecotricity Mark Neveu believes that timing is everything. As he says: “It is really important to consider the time of day when you’ll be using your energy and whether you’ll need it in the evenings.

“Most suppliers have a standard daily tariff, but there will also be a day and night tariff, something to keep in mind when looking at prices.”

It’s also important to consider whether to use a fixed term energy contract or to go on a variable tariff. A fixed term contract is where there will be a penalty to get out of the contract, while a variable contract is more flexible and the prices will vary as wholesale market prices change.

In the next instalment of our energy series, we take a look at renewable energy sources…