I've been working with energy brokers for a few years now here in Philly, mostly with PECO accounts. Recently had one quote me a 15% commission on a 2MW industrial account - seems high to me. What are you all seeing as typical broker fees? I've heard anywhere from 8-20% but wondering what the sweet spot is. This particular deal would save the client about $180K annually, so we're talking serious money. Want to make sure I'm not getting taken for a ride while still being fair to a good broker.
Broker commission structures - what's fair?
Phil, I work with several brokers down here in Atlanta with Georgia Power accounts. For commercial accounts over 1MW, I typically see 10-12% as the standard. 15% is on the high side unless they're bringing something special to the table - maybe they have exclusive supplier relationships or they're handling all the paperwork and ongoing management. What services are they providing beyond just the initial quote? If it's just a simple rate comparison, I'd push back.
I've seen it all over the map here in Charlotte with Duke Energy. The key is understanding if it's a one-time commission or if they're getting paid every month. Monthly commissions should be much lower - maybe 2-3% ongoing. One-time upfront should be 8-15% depending on complexity. Make sure you understand exactly when and how they get paid. I had one broker try to slip in language about getting paid even if the deal fell through after signing.
Here in Connecticut with Eversource territory, I've found that broker fees often correlate with how much legwork they're actually doing. Good brokers will analyze your load profile, handle all supplier negotiations, manage the switching process, and provide ongoing rate monitoring. If they're doing all that, 12-15% isn't unreasonable. But if they're just sending you a rate sheet and walking away, 8-10% max. Always ask for a detailed breakdown of what services the commission covers.
Jack from Louisville here - working with LG&E accounts mostly. One thing to watch out for is brokers who want to lock you into exclusive agreements. I had one try to get me to sign a 3-year exclusive deal at 18% commission. Told them to take a hike. Competition keeps them honest. Also make sure any agreement has clear termination clauses if they're not performing.
Thanks everyone - really helpful perspectives. This particular broker is offering full service including load analysis, contract negotiation, and quarterly rate monitoring. They also claim to have relationships with suppliers that can get us better rates than we'd see going direct. Given that context, maybe 15% isn't completely out of line. I'm going to counter at 12% and see what they say.
Good call on negotiating, Phil. One more tip - make sure the commission structure doesn't incentivize them to push longer contract terms just to maximize their payout. I've seen brokers push 3-5 year deals when a 2-year would be better for the client, just because their commission is based on total contract value. Keep the client's best interests front and center.
Walt from Pittsburgh chiming in - with Duquesne Light accounts, I always insist on seeing the actual supplier quotes before the broker markup. Some brokers add their commission on top of already inflated rates. Transparency is key. If they won't show you the base rates, find a different broker.