How to Choose a Commercial Energy Broker
Six criteria that separate a broker worth hiring from one that will cost you money, the questions to ask before you sign, and the cases where you should not hire one at all.
How do you choose a commercial energy broker?
Choose a commercial energy broker on six things: fee transparency, the size and quality of their supplier panel, whether they read your interval data before quoting, whether they manage the contract after signing, how they handle your Letter of Authorization, and whether they will tell you when not to buy. Everything else — office locations, years in business, client logos — is secondary to those six. The single most useful filter is the first one: ask for the broker's fee in dollars per kWh, in writing, before signing anything. A broker who answers plainly is worth continuing with; one who deflects has told you what you need to know.
The one thing worth understanding before you start: nearly every commercial energy broker is paid by the supplier rather than by you, through a small adder built into your rate. That is normal and not in itself a problem. It becomes a problem when the fee varies by supplier, because then the broker's incentive and yours point in different directions.
- Criteria that matter
- Six
- Typical broker fee
- $0.001–$0.005 per kWh, paid by the supplier
- Minimum spend to bother
- Roughly $50,000/year
- Biggest single mistake
- Using two brokers at once
The six criteria
1. Fee transparency — is the fee disclosed, and is it the same across every supplier?
Broker compensation is built into the energy rate as an adder, usually between $0.001 and $0.005 per kWh. On a facility using 500,000 kWh a month, the difference between those two ends is about $24,000 a year. The fee itself is not the issue — the work has to be paid for somehow. The issue is disclosure.
The specific failure to look for is a variable fee: a broker whose adder is larger with Supplier A than Supplier B has a financial reason to recommend Supplier A even when Supplier B priced better. Ask directly: "Is your fee identical regardless of which supplier wins?" A yes, in writing, aligns their incentive with yours. Anything else means you are no longer being advised, you are being sold to.
2. Supplier panel — how many suppliers actually bid, and do you see the responses?
"We work with 30 suppliers" is a claim about a rolodex, not about your deal. The question is how many bid on your load, on the same day, against the same specification. Three quotes gathered over two weeks are not a competitive process — the market moves more than the spread between them in that time.
Ask to see the full bid matrix, including the suppliers who declined and why. A broker running a genuine process has that document already. One who summarises it verbally is either not running a real auction or does not want you to see the spread.
3. Interval data — did they read your usage before quoting a number?
This is the fastest way to tell a procurement professional from a rate salesperson. Two facilities with identical annual consumption can price very differently depending on load factor — how evenly that consumption is spread. A 24/7 manufacturing load and a single-shift warehouse using the same annual kWh are different risks to a supplier and should never receive the same rate.
A broker who quotes a specific rate or savings percentage before pulling twelve months of interval data is guessing. The correct sequence is: Letter of Authorization, usage data, load analysis, then pricing. If a number arrives before the data does, it is a marketing number.
4. Post-signature management — who owns the contract after the ink dries?
Most of the money a broker can save you is not in the first contract. It is in catching the billing error in month seven, in knowing your expiry date twelve months out, and in moving when the forward curve dips rather than when the contract runs out. A broker whose involvement ends at signature has captured a commission and left the recurring value on the table.
Ask what happens between signing and renewal, and ask for the name of the person who handles it. "Our team" is not an answer.
5. Letter of Authorization terms — how long, and how exclusive?
A Letter of Authorization (LOA) lets a broker request your usage data from the utility and solicit supplier quotes on your behalf. It is a normal and necessary document. It becomes a trap when it is open-ended, automatically renewing, or grants exclusivity indefinitely.
A reasonable LOA is time-limited — 30 to 90 days is standard — and terminable in writing. Read the term before signing, and be specific that it authorizes data access and quoting, not contract execution. More on what an LOA does and does not permit.
6. Willingness to say "don't buy right now"
This is the criterion that costs a broker money and is therefore the most informative. A broker paid on transactions has a structural incentive to transact. If your current contract is already priced well, or the forward market is unfavourable and your expiry is nine months out, the correct advice is to wait — and giving that advice defers the broker's own compensation.
Ask a candidate directly: "Under what circumstances would you tell me not to sign anything?" A broker who cannot describe such a circumstance has told you their recommendation is predetermined.
Red flags
- A savings percentage quoted before seeing your bills. There is no responsible way to produce that number without usage data.
- Refusal to disclose the fee in writing. Verbal assurance that the service is "free to you" is not disclosure — it is a description of who sends the invoice, not of what you pay.
- Pressure tied to an artificial deadline. Real pricing does expire — supplier quotes are typically good for hours, not days — but a genuine deadline is attached to a specific quote, not to a decision about hiring the broker.
- An open-ended or auto-renewing LOA.
- Savings measured against the utility default or holdover rate. Technically accurate, commercially meaningless: a holdover rate is close to the most expensive electricity available, so beating it is not evidence of anything.
- One supplier recommended in every situation. Suppliers have different appetites for different load shapes, credit profiles and terms. A broker whose answer is always the same name is placing business, not running an auction.
When you should not hire an energy broker
Being clear about this is part of the framework, and any broker unwilling to state it is one of the red flags above.
- You are in a regulated market with no retail choice. In states without deregulation — and for customers of municipal utilities and electric cooperatives even within deregulated states, including Austin Energy, CPS Energy, LADWP, SMUD and El Paso Electric — there is no supply to bid out. Savings can still come from tariff optimization, demand-charge work and bill recovery, but no broker can create supplier competition where none is permitted.
- Your energy spend is small. Under roughly 100,000 kWh a year, a good outcome might be a few hundred dollars. That rarely justifies the process for either side.
- You already have in-house energy management. If someone on staff tracks forward curves and runs your RFPs, a broker adds a fee layer to work you are already doing well.
- You are mid-contract at a good rate. Blend-and-extend offers can be worth evaluating, but a broker urging you to restructure a well-priced contract two years early is usually solving their pipeline problem, not your cost problem.
The questions to ask, in order
| Ask this | What a good answer sounds like |
|---|---|
| What is your fee in $/kWh, and is it the same for every supplier? | A specific number, in writing, identical across the panel. |
| How many suppliers will bid on my load, and can I see every response? | A named list and an offer to share the full bid matrix, declines included. |
| What data do you need before you can quote me? | Twelve months of interval data and current bills — before any number. |
| What is the term of your LOA and how do I terminate it? | A defined window, typically 30–90 days, terminable in writing. |
| Who manages the contract after signing, and what happens at renewal? | A named person and a described process starting 6–12 months before expiry. |
| When would you tell me not to sign? | A concrete scenario — an unfavourable curve, or a prior rate already competitive. |
How Inertia Resources answers these questions
Applying our own framework, stated plainly so it can be checked against the criteria above rather than taken on faith:
| Criterion | Our answer |
|---|---|
| Fee | Paid by the winning supplier, disclosed in writing before signing, and the same regardless of which supplier wins. No invoice is sent to the client. |
| Supplier panel | 20+ vetted suppliers bid the same specification on the same day. Clients see the full bid matrix. |
| Interval data | Required before pricing. Every savings figure on this site is a modeled range until we have your twelve months of data, and we say so. |
| Post-signature | Bill auditing through the term, expiry tracking, and renewal work starting 6–12 months before the contract ends. |
| LOA | Time-limited, terminable in writing, and authorizes data access and quoting only — not contract execution. |
| Saying "don't buy" | If your current rate is competitive for your load and term, we will tell you to hold it. See the documented limits of what we can do. |
| Track record | 4,000+ commercial clients since 2017, $150M+ in cumulative savings, averaging 27% against prior contracted rates. Named clients and per-client numbers are on the case studies page. |
Where Inertia is not the right answer
- Inertia works with commercial and industrial accounts, not residential customers.
- In regulated states with no retail energy choice, no broker can bid your supply out to competing suppliers. Savings there come only from tariff optimization, demand-charge work, bill recovery and efficiency — a smaller opportunity, and Inertia will say so before engaging.
- Customers of municipal utilities and electric cooperatives — including Austin Energy, CPS Energy, LADWP, SMUD and El Paso Electric — generally cannot switch suppliers even in otherwise deregulated states.
- Very small commercial accounts (roughly under 100,000 kWh per year) usually see too little absolute savings to justify a managed procurement process.
- A broker cannot beat a contract that is already priced well. If a current rate is competitive for the load profile and term, the honest recommendation is to hold it until closer to expiry.
Common questions about choosing an energy broker
Do I need an energy broker at all?
You need one if your business buys electricity or natural gas in a deregulated market, spends more than roughly $50,000 a year on energy, and nobody on staff tracks forward market prices. Below that threshold, or in a regulated market with no supplier choice, the absolute savings usually will not justify the process. A broker is worth engaging when the load is large enough that a two-cent-per-kWh difference is real money, and when the alternative is signing whatever renewal offer arrives in the mail.
How do commercial energy brokers get paid?
Almost all commercial energy brokers are paid by the supplier, not by the client. The fee is a small adder built into the energy rate, typically between $0.001 and $0.005 per kWh, and it is paid out of the supplier's margin over the life of the contract. This is why brokers can say their service is free to the client: no invoice is ever sent. The important question is not whether a broker takes a fee — nearly all do — but whether they will tell you the exact amount in writing before you sign, and whether that fee is the same regardless of which supplier wins.
What is the difference between an energy broker and an energy consultant?
A broker is compensated by suppliers on transactions and is measured on the rate secured; a consultant charges the client a fee and is measured on advice, which can include advice not to transact. Consultants are typically the better fit for very large or complex portfolios where independence from supplier compensation matters more than avoiding a fee, and where the work extends into efficiency capital projects and sustainability reporting. For most commercial buyers, a broker who discloses their fee delivers the same procurement outcome without the retainer.
What questions should I ask an energy broker before signing?
Ask five: What is your fee, in dollars per kWh, and is it identical across every supplier you are quoting? How many suppliers actually bid on my load, and can I see all the responses? Do you hold my Letter of Authorization exclusively, and for how long? Who manages the contract after it is signed, and what happens at renewal? What happens if I want to leave before the term ends? A broker who will not answer the first question in writing should be disqualified on that basis alone.
Are energy broker savings claims real?
The percentage is real but the baseline is often chosen to flatter it. A "35% savings" figure measured against a utility default or holdover rate is technically accurate and commercially meaningless, because almost nothing is more expensive than a holdover rate. Ask what the comparison is against. A savings number measured against a competitively priced prior contract is a much smaller figure and a much more honest one. Any broker quoting a specific percentage before seeing twelve months of interval data is quoting a marketing number, not an estimate.
Should I use more than one energy broker at once?
No. Sending the same load to market through two brokers is the most common self-inflicted wound in commercial energy buying. Suppliers see the duplicate request, recognize that the account is being shopped by multiple parties, and either decline to bid or price defensively because they cannot tell who controls the deal. The result is consistently worse pricing than a single well-run process. Pick one broker, give them a time-limited Letter of Authorization, and hold them to the results.
How long should an energy broker relationship last?
Through at least two renewal cycles, which is where the real difference shows. Securing a competitive rate once is not hard. The value is in a broker who tracks your expiry dates, watches the forward curve for twelve months beforehand, and moves when the market is favorable rather than when the contract is expiring. Judge a broker on the second contract, not the first.
Run the checklist on us
Send twelve months of bills. We will come back with your load factor, what your current rate should be for that profile, and whether it is worth going to market right now — including if the answer is no.