LOA’s and LOE’s.
Letter of Authorization (LOA)
Legally, an LOA is a document signed by a prospect or customer stating that the customer authorizes an energy broker to act on its behalf. Some of the things the customer authorizes in an LOA include:
- allowing the broker to represent the customer with energy suppliers
- allowing the broker (and its suppliers pricing the account) to obtain historical usage data from the local utility
- allowing the broker (and its suppliers) to price the customer’s account(s)
In the retail energy sector, energy suppliers might require a signed LOA from an energy broker’s customer in order to release pricing to that broker. Since energy suppliers are not communicating directly with an energy broker’s prospect or customer, they may require an authorization letter to be signed by the customer in order to show that customer’s intent. In many states, LOA’s are required to custom price any account and must be kept on file by the supplier. Here is a sample of Diversegy’s current LOA.
Letter of Exclusivity (LOE)
An LOE is similar to an LOA in the fact that it authorizes an energy broker, and its suppliers, to obtain historical usage information, price accounts, etc. The major difference between an LOE and and LOA is that in an LOE, the prospect/customer names the broker as its exclusive agent or representative for obtaining energy supplier price quotes. There are many uses for an LOE in the retail energy sector:
- when multiple brokers are pricing the same account with a supplier, the broker with the LOE overrides all other quotes
- LOE’s show energy suppliers that the customer is serious about working with the energy broker
- when another broker is actively pricing an account with a supplier, the supplier requires an LOE for a new broker to price the account
Since retail energy suppliers will not give price quotes to multiple brokers for the same customer, the first broker to price the account with the supplier gets the quote. However, if a broker is able to get a letter of exclusivity from that customer, the broker with the signed LOE will take precedence. Here is a sample of Diversegy’s current LOE.