At a Glance:
There are different types of energy brokers based on customer type and industry sector. In this article, we will explore the differences between commercial energy brokers and residential energy brokers, what they do, and how they operate.
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Commercial energy brokers work with all types of businesses and governmental facilities. From restaurants and retail stores to large manufacturing facilities, commercial energy brokers negotiate the supply of electricity and natural gas for these entities in deregulated markets. Learn more about commercial brokers below.
What Commercial Brokers Do.
Commercial energy brokers earn a living by selling electricity and/or natural gas to commercial entities located in deregulated states. In these utilities, businesses have the option to purchase their energy supply from a third-party supplier, other than their local utility company. Commercial brokers have relationships with energy suppliers and find more favorable energy prices for their customers. By helping their customers to enter into contracts with suppliers, they earn a sales commission for doing so. Many times, these commissions are paid for the lifetime of the customer’s contract and are compensated based on the customer’s energy consumption volumes.
Key Benefits For Business Customers.
There are many benefits to using an energy broker for commercial customers. When you are running a business, you have many things to focus on and your utility bill might be the last thing on your mind. In fact, if you are located in a recently deregulated state, then you might be used to simply purchasing energy from your local utility. Tracking commodity prices and negotiating deals with energy suppliers might be a foreign concept to you. In addition to finding you the best energy rates, commercial brokers bring value to customers by:
Gathering quotes from multiple energy suppliers.
Evaluating customer energy usage to find the best-fit supply product
Monitoring the market for future contract price opportunities
Requirements To Become An Energy Broker.
There are different ways to enter the market and become an energy broker. Most people start out by aligning themselves with a larger brokerage company and by acting as a sales agent. These people benefit from the size and influence of their broker and simply make a living by acquiring new customer accounts. Their broker helps them with pricing, market analysis, supplier contract negotiation, and customer renewals.
Others who wish to obtain their own broker licensing must go through a grueling vetting process. Many states require licenses from energy brokers, and each state has its own energy broker licensing process. After a new broker proves his or her financial strength and market knowledge, they can receive a license. They then must obtain relationships with the leading energy suppliers in order to offer pricing to their customers. This process alone can be daunting since most suppliers only want to work with more established brokers. With that said, there are many pros to becoming an energy broker.
Residential energy brokers, on the other hand, have a completely different business model when compared to commercial brokers. Residential brokers focus on selling electric and natural gas supplier rate plans to residential customers who live in homes and apartments. Since residential customers use much less energy than commercial customers, the sales commissions are also a lot less. These brokers count on proven sales models to acquire large volumes of accounts. Here is more information on becoming a residential electricity broker:
How Residential Energy Brokers Operate.
Since residential brokers must sell lots of accounts to earn a good income, they have different sales models than commercial energy brokers. Many residential brokers operate door-to-door companies or telesales organizations that attempt to sell energy to homeowners in volume. Other online brokers are creating eCommerce websites where residential customers can enroll with a supplier on the computer.
Benefits For The Homeowner.
If you own a home or live in a deregulated state, you can choose your energy supplier and there are many benefits to doing so. Some energy suppliers will offer different incentives for signing up, such as free smart thermostats, lightbulbs, or even gift cards to local restaurants. In addition to these perks, there is also the opportunity to save money on your utility bills. Since most utilities in deregulated states offer a standard default rate, homeowners have the ability to lock in fixed rates that are below the utility to save on their energy bills.
Becoming A Residential Broker.
Becoming a residential energy broker is no easy feat. Since consumers are in a protected class with most Publish utility Commissions, the licensing process for residential brokers is much more stringent. In addition, it is quite hard to acquire residential customers in masses in order to be profitable. You must have some sort of proven sales model in place to become a successful residential electric broker.
Thinking About Becoming A Broker?
Why Choose Diversegy.
Through the strong backing of our parent company and highly experienced management team, Diversegy is positioned to help you grow to the next level. We make becoming an energy broker simple. In fact, our brokers benefit from our vast experience and can have a turn-key broker business overnight. Here are some of the benefits of partnering with Diversegy.