We're considering working with an energy broker for our multi-site operations here in Missouri. The guy seems knowledgeable and claims he can get us better rates with Ameren than what we're paying now on tariff LGS-2. But I'm skeptical after reading some horror stories online. What should I be looking for to verify this broker is legitimate? Are there licensing requirements or professional organizations I should check? Our current electric costs are running about $45,000 monthly across all locations so this is a significant decision.
How do you verify a broker's credentials?
Bill, great question and smart to do your homework first. In most states, energy brokers are required to register with the public utility commission. Check with the Missouri PSC to see if they have a database of registered brokers. Also ask for references from similar businesses and actually call them. A legitimate broker should have no problem providing 5-10 references from current clients. Red flags include upfront fees, door-to-door sales tactics, and pressure to sign immediately.
I'd also recommend checking with the Better Business Bureau and looking up the broker's business license. Here in Minnesota we've had issues with brokers operating under multiple business names to hide bad reviews. Ask specifically about their commission structure - legitimate brokers are usually transparent about whether they're paid by the supplier or the customer. Also make sure any contract has a clear cancellation clause with reasonable terms.
One thing that's helped me evaluate brokers is asking them to explain exactly how they'll save you money. If they just say 'I have better relationships with suppliers' that's not good enough. They should be able to show you current market rates, explain the rate structure differences, and provide a detailed cost comparison. I use a broker here in Denver for some of my larger clients and he always provides a written analysis showing exactly where the savings come from.
Don't forget to verify they're actually authorized to represent the suppliers they're quoting. I caught a broker in Harrisburg once who was giving quotes from PPL suppliers he wasn't even contracted with. When we tried to move forward, suddenly the rates changed. Call the suppliers directly and confirm the broker is authorized to sell their products. Also get everything in writing before you commit to anything.
All great advice here. Bill, one more thing to consider is whether you actually need a broker for your situation. With $45K monthly in costs, you're large enough that many suppliers would work with you directly. Sometimes cutting out the middleman can get you better rates since there's no broker commission built in. I've seen cases where the 'savings' a broker promised were just bringing rates down to what the customer could have gotten on their own. Might be worth getting some direct quotes for comparison.