Broker or Direct?

A commercial energy contract signed directly with a retail supplier is not cheaper than the same contract arranged through a broker, because the supplier builds its sales cost into the price either way; what changes is whether that price was tested against competing suppliers on the same day. A broker that runs a simultaneous bid across {F('supplier_count')} licensed suppliers typically lands {F('savings_range')} below a buyer's prior rate. A buyer going direct gets one supplier's view of what the buyer will accept. There are situations where direct is still the right choice, and this piece names them.

We are a broker, so read what follows knowing that. The comparison is written the way we would want it written by a competitor: with the cases where our model adds nothing stated plainly.

How each side is paid

Retail suppliers acquire customers through three channels: their own sales teams, brokers and consultants, and online or telesales. All three cost money and all three are recovered in the supply rate. When a buyer contracts direct, the supplier's internal sales cost and margin are in the price. When a buyer comes through a broker, the broker's fee is in the price instead, usually as a fixed amount per kWh or per Dth that the supplier pays the broker over the life of the contract.

The claim that direct is cheaper rests on the idea that removing the broker removes a cost. In practice the supplier does not lower the price when there is no broker; it keeps the margin. Our note on how broker commissions actually work goes through the arithmetic, and the one thing to insist on from any broker is that the fee is fixed, disclosed and the same whichever supplier wins. A fee that varies by supplier is an incentive to steer.

What a direct quote is

A direct quote is a single supplier pricing a load it has not had to compete for. The supplier's pricing desk knows three things: the wholesale forward curve, its own cost to serve, and an estimate of what this buyer will accept. The third input is where the margin lives. A buyer who has one quote has no way to know whether the supplier priced at cost plus a thin margin or at cost plus whatever the buyer's previous bill suggests they are used to paying.

A buyer can fix this by collecting several direct quotes. Three things make that hard to do well. The quotes arrive on different days against a moving wholesale market, so they are not comparable. Each supplier quotes its own contract structure, swing allowance and pass-through terms, so the lowest headline number may carry the most risk. And the buyer has to supply interval data, bill copies and a load profile to each supplier separately, which is why most buyers stop at one or two.

What a managed bid changes

A broker's job, when done properly, is to make the quotes comparable and simultaneous. The load data is pulled once under a Letter of Authorization, a single term sheet goes to every supplier, and the bids come back on one day so every price reflects the same market. The structural terms are normalized: identical swing, identical pass-through treatment, identical term, so the comparison is on price. The supplier knows it is one of many and prices accordingly.

That is the mechanism behind the savings number. It is not that a broker has access to prices a buyer cannot get. It is that the supplier prices a competitive, well-documented load tighter than a one-off inquiry. The 90-day timeline shows what the process looks like week by week.

Where the broker adds nothing

There are four situations where we tell a prospect to contract direct, or not to contract at all:

1. The load is small. Below roughly 100,000 kWh a year the absolute savings from a managed bid are too small to matter. A direct fixed-rate offer from a reputable supplier, or the utility's default service, is fine. Spending weeks on it is not.
2. The current contract is already well priced. If a buyer signed in a favorable market and has two years left, no broker can beat it. The right advice is to leave it alone and start watching the curve twelve months before it ends.
3. The buyer has an in-house energy manager who runs a real RFP. A corporate energy team that already pulls interval data, issues identical terms to eight suppliers and takes bids on one day is doing the broker's work. Adding a broker adds a fee without adding competition.
4. There is no retail choice. On a municipal utility such as Austin Energy or CPS Energy, or in a regulated state, there is no supplier to bid. Savings there come from tariff work and bill auditing, not procurement, and a broker promising supply savings is wrong.

Where direct goes wrong

The failures we see when a buyer contracts direct are rarely about the headline rate. They are about terms the buyer did not know to negotiate:

• Swing. A tight usage bandwidth that charges the buyer market price for any kWh above or below a band. A facility that adds a shift or closes a site gets billed outside its fixed price.
• Pass-throughs. Capacity, transmission and renewable portfolio standard costs that the contract allows the supplier to pass through at any change, which converts a fixed price into a mostly variable one.
• Term start. A contract that starts at the next meter read rather than at the current contract's end, so the buyer either overlaps or falls into a holdover month.
• Auto-renewal. A clause that rolls the contract for another term at the supplier's then-current rate unless the buyer gives written notice inside a narrow window.

Our note on the contract clauses that cost you money covers each of these. None are hidden; they are in the supplier's standard paper, and a buyer who signs that paper direct accepts them.

A fair comparison

If a buyer wants to test the question for a specific load, the test is simple. Get the direct quote, with its full terms. Then have a broker run a same-day bid on identical terms and compare the winning price plus the disclosed broker fee against the direct number. A broker who will not disclose the fee, or who will not run the bid on the buyer's terms, has answered the question already. A supplier who lowers its direct quote once it learns a bid is coming has answered it too.

Inertia has run that comparison for {F('clients_served')} clients since {F('founded')}. The average result is {F('average_savings')} below the prior rate, and the cases where we told the buyer to stay direct are the reason the other cases trust the number.