There’s no question that energy is a complex industry with many layers and many different players. Energy brokers are one of these players. While electricity providers help residential and commercial customers alike, there are many people that don’t know about the types of services and benefits that these organizations provide.
To help provide some context and clarity, we’ve put together the ultimate guide to electricity brokers in the United States.
What are Energy Brokers?
The primary goal of an electricity broker on a broader level is to reduce energy costs for businesses. Most brokers focus on commercial accounts, while some focus on both residential and commercial.
In general, electricity brokers are consultants. Their job consists of advising their customers about the best products, services, etc. that fit their business’ budget and needs. That being said, it is important to understand that electricity brokers do not actually sell electricity. They act as a kind of “middle man” between energy producers and energy consumers. So, if you are a residential consumer and you work with an electricity broker, that broker will negotiate the rates and other contract details between you and your electricity supplier.
When it comes to commercial and industrial consumers, this is where the electricity broker typically plays more of a consultant role. A good energy broker can conduct audits and investigate areas for energy improvements in addition to working with electricity suppliers to get you the absolute best electricity rates in Texas and other deregulated markets.
Texas Electric and Natural Gas Brokers
Established in 2002, Eisenbach Consulting, LLC, our parent company, is one of the oldest and most trusted energy brokers in the state of Texas. Eisenbach Consulting, LLC works with many clients across deregulated markets around the country to help procure and manage electricity.
Procurement: This is the process by which Eisenbach Consulting acquires the best possible energy rate for their clients. It describes the negotiation process, in addition to the relationship with its electricity and natural gas providers. Again, Eisenbach Consulting, LLC and other brokers do not directly sell electricity, they work with energy providers to obtain or acquire that electricity for the consumer.
Management: This process is typically more useful to commercial or industrial consumers. Eisenbach Consulting, LLC will help the customer to come up with a better plan to manage energy, which can include any variation of the following:
- Creating a better outage response plan
- Finding state funded grants
- Improve voltage throughout facilities
- Reducing heat loss throughout facilities
- Predominant use studies
Eisenbach Consulting will perform consultative services to ultimately help their customer better manage their electricity. As a result, these activities will help the customer to lower their electricity related expenses.
Questions to Ask Energy Brokers
Before you hire an energy broker, there are some important questions to ask. Some of these questions include:
- Do they have experience in your industry?
- Did they mention relevant services that would benefit your company?
- Did they provide a written list of all the services they would provide?
- Does the company have references that you can contact?
- What types of agreements does the broker offer you or your company?
- Did the broker reveal the name of the electricity supplier to you or your company?
- Does the broker have a confidentially agreement in place with the supplier that prevents you from understanding the commission the broker receives?
- Did the broker reveal all sources of payment, etc., based on the agreement you are to sign with them?
- Does the broker really understand your requirements?
Think of hiring an energy broker as you would any other company or individual. You want to make sure that the broker does, in fact, have your best interests at heart. The last thing you want to do is hire a broker that doesn’t end up saving you or your company any money on your electricity.
Rules and Regulations in the Industry
The energy industry operates within a very specific set of regulations and laws. Electricity providers are no different.
According to a report published by RAP called Electricity Regulation in the United States: A Guide, “FERC has clear authority to regulate wholesale power sales, except when the seller is a public agency. The federal power marketing agencies, such as the Tennessee Valley Authority and Bonneville Power Administration, and local municipal utilities are specifically exempt from general regulation by FERC.” The report goes on to say, “Hundreds of companies are registered with FERC as wholesale power suppliers. While some own their own power plants, marketers often do not; instead they buy power from multiple suppliers on long-term or spot-market bases, then re-sell it. Brokers arrange transactions, but never actually take ownership of the electricity.”
In addition, the report states, “A non-utility generator (NUG), or independent power producer (IPP), owns one or more power plants but does not provide retail service. It may sell its power to utilities, to marketers, or to direct-access consumers through brokers.”
When it comes to deregulated energy markets, the report says “In states that have restructured their retail electric markets, separate companies exist to sell commodity electricity to local individual consumers. Some companies specialize in selling “green” power from renewable energy, while others specialize in residential, commercial, or industrial service. These suppliers may own their own power plants, buy from entities that do, or buy from marketers and brokers.”