If you live in a state with deregulated energy, then you might be wondering if energy deregulation is good. And, if you operate a business, then you might be wondering the same thing about energy brokers. There are many different types of energy brokers selling energy in deregulated states, and in this article we will outline the signs of a legitimate energy broker and the red flags to watch out for and avoid.
Signs An Energy Broker Isn’t Transparent
Transparency is a key ingredient in business. And, when you are hiring a business energy broker to negotiate your electricity and/or natural gas supply contract, then it is imperative to have transparency and honesty in your relationship. Here are some of the common signs to watch out for indicating that the energy broker you’re thinking of using isn’t as transparent as you thought…
Not Willing To Show You The Energy Supply Contract
If your energy broker refuses to show you a copy of the retail energy contract and simply wants you to complete a DocuSign or signature line, then it is a big red flag! As a business owner, you should read and understand the contract language every contract you sign. Unscrupulous energy brokers will use sales tactics to distract you from the details and get you to “just trust me and sign on the dotted line”.
Can’t Explain The Energy Price Components
In a fixed-rate energy supply contract, there are several price components that make up the total rate. For electricity, the major components are energy, transmission, and capacity. For natural gas, those components are gas, transport, and basis. If your broker cannot explain what exactly is included in the rate, then you should avoid doing business with him or her.
Doesn’t Clearly Explain The Term Of The Contract
Every fixed-rate energy contract has a start date, end date, and terms outlining what happens if you do not renew. If your broker signed you up for a fixed rate but overlooked telling you the term length of the contract, it’s a big red flag! Remember, energy brokers make money off every unit of energy being consumed over the total contract period. So, the longer the contract, the more sales commissions for them. Now, that doesn’t mean that all long-term contracts are bad. In some cases, a longer term agreement might be what’s best for you based on market conditions, but if your broker didn’t tell you the contract term, then stay away!
Characteristics of ‘Legit’ Energy Brokers
There are many energy brokers and energy broker organizations that conduct business in a professional and legitimate manner. Understanding the characteristics of a legitimate energy broker is critical when deciding what type of energy broker to hire. Here are some of the good signs you should be cognizant of when working with an energy consultant or broker…
Clear Explanation of Services
When you use an energy broker to find you an energy supply rate, it is clear they are being compensated in some manner. If your broker is able to clearly articulate how he is compensated and what services he will deliver in exchange for that compensation, then you’ve found someone you can trust.
A Track Record And Reputation Of Trust
Unfortunately, there are many “part-timers” in the energy broker sector. These are individuals who are trying to make fast money by using their personal connections to sell a product they do not know anything about. While we are not saying to avoid a friend who might have become an energy broker, it is always best to work with a professional energy broker who has a track record of success. If your broker is able to show you case studies from other clients, references, online reviews, or prove that he has a good reputation among his past customers, then you might have found a “good one”. It is important to do business with professionals who understand their industry and are able to bring value to your organization, and nothing screams credibility more than positive stories from other businesses and customers.
Licensed and Bonded
A determining factor in separating legitimate energy brokers from the “fly-by-night” companies, is the status of their energy broker license and state bonding. Energy brokers in deregulated energy states are required to obtain licensure or register with the state PUC. If your broker is licensed, then he went through a heavy vetting process to prove his worthiness and credibility.
Are You Looking For A Legitimate Energy Broker?
While it might take time to sift through the many individuals and organizations claiming to be energy brokers, this article should serve as a guide in determining the haves from the have nots. If you are looking for a professional energy brokerage organization to represent you when negotiating the purchase of energy supply, then you’ve come to the right place. Not only is Diversegy a licensed energy broker in all deregulated states, we are owned by a publicly-traded energy company that also holds many energy supplier licenses. Contact us today to learn more about our energy services.