There are a few simple reasons.

Whether it's the energy industry, the insurance industry, or the banking industry, brokers provide a valuable service to the marketplace. In the case of the energy industry, energy suppliers consider brokers to be a valuable channel to the retail energy markets, allowing suppliers to have smaller in-house sales and marketing groups. This saves them the overhead costs associated with maintaining these employees as well as the marketing cost associated with acquiring customers. Brokers account for almost half of the volume of some energy suppliers.

Lightbulb with question markReason #1

When energy suppliers are forced to compete for your business, you save money. It is human nature that whenever somebody is selling a product (whether it's a car, a necklace, or a MW of electricity), their offer price is affected by the prospect of competition. If they feel that they have no competition…..the price offered will be higher. Brokers FORCE competition. Many suppliers will offer a different/lower price to brokers as compared to giving a customer a price directly, simply because they know they have to compete for the business. This drives the suppliers margin, as well as your final price, downward.

row of electricity usage meters

Reason #2

Another reason that suppliers are more likely to give a broker a better price than that of an individual company going directly to the supplier for pricing is due in large part to the fact that larger brokers such as KEYTEX Energy are placing many customers with suppliers over the course of the month. A supplier is much more likely to give a competitive price to a broker, not only because they know they are competing for the business, but also because they know competitive pricing through a broker will get them the opportunity for more business from the broker. When a customer goes directly to a supplier, this "volume discount" is not necessarily realized by the customer. The supplier doesn't necessarily feel the need to price as aggressively because the customer's one contract may come up for renewal only once every year or two. Compare this to brokers giving them the opportunity to bid on dozens of customers per month…who do you think is more likely to get a better price?

street sign with the words Service, Support, Consulting, Assistance, and Maintenance

Reason #3

Some brokers, such as KEYTEX Energy offer consulting services that go far beyond the scope of what a supplier can offer. Most suppliers are only interested in giving a price to supply electricity, which is their core business. They simply don't have the staff to provide "value added" services. If your company's situation in non-standard in any way, brokers such as KEYTEX can offer you services that most suppliers won't. This would include such things as utility bill auditing, rate schedule analysis, sales tax audits, and quantitative analysis services, just to name a few.

electrical plug plugging into an electrical outlet

Reason #4

Faced with the prospect of shopping for electricity on their own, most companies would be hard pressed to name more than one or two electricity suppliers to solicit pricing from. Larger brokers such as KEYTEX Energy work with a dozen or more suppliers, increasing the probability of lower, more competitive pricing for you.

electrical power plant control room

Reason #5

It is difficult for customers to properly and effectively compare the results of bids received from multiple suppliers. A suppliers bid is based in large part upon market prices for electricity which change by the minute. A price received from a supplier on one day, is NOT directly comparable to a price received from a second supplier on another day. This makes comparing results very difficult. Furthermore, the contract terms and conditions for each supplier are different. As an educated buyer for your company, you need to understand the subtle differences between the contracts. Some differences can materially affect what you pay. More experienced brokers, such as KEYTEX Energy, have extensive experience with contract language, maintaining and reviewing all supplier contracts on a regular basis.

blue electrical meter

Reason #6

Do you KNOW for sure that all pricing components are included in the price you receive from a supplier? For example, some suppliers will quote prices which do not include certain taxes. This will make their price appear lower than it really is. KEYTEX Energy reviews all supplier pricing for all pricing components, making sure all items are included so that the price you see is truly an all-in price.

Lightbulb in front of graphWho pays the broker for their service?

The broker is paid a fee by the supplier for the business that they bring to the supplier. This is similar to the fees paid to car dealers by banks for having the customer finance their car with a particular bank. It is also very similar to the way you purchase insurance. In the case of the energy supplier, this fee is reflective of the fact that the supplier is avoiding the employee overheads and marketing expense associated with acquiring the customer through their own in-house sales force. The broker is being compensated for the marketing and employee expenses associated with customer acquisition for the supplier.