Getting quotes from several energy brokers for our Duke Energy Progress industrial account here in Raleigh. Fee structures are all over the map and I'm trying to figure out what's reasonable in today's market. Seeing everything from 15% of first-year savings to 25% of savings for three years. One broker wants $50,000 upfront plus 20% ongoing. What are you all seeing for fee structures on larger commercial accounts? Our annual electric spend is around $850,000.
Broker fee structures - what's reasonable these days?
Steve, for an account that size I'd expect fees in the 15-20% range of first-year savings, maybe extending to second year if they're doing ongoing monitoring. The $50K upfront fee is a red flag unless they're doing major infrastructure analysis or equipment recommendations. Here in Ohio with FirstEnergy territory, most legitimate brokers work on pure success fees. Upfront payments usually mean they're not confident in their results.
I agree with Bob on the upfront fee concern. Pacific Power accounts here in Oregon - most brokers I work with charge 18-22% of first-year savings with no money down. The three-year fee structure can work if the savings are guaranteed and they're providing ongoing service, but make sure there's an escape clause if promised savings don't materialize. You shouldn't be locked into paying fees on savings that never appear.
Portland General Electric territory here - seeing similar fee ranges but the devil is in the contract details. Some brokers calculate fees based on gross savings, others on net savings after their fee. Make sure you understand exactly how they're calculating. Also watch out for 'savings' calculated against inflated baseline rates. I always insist on seeing their methodology before signing anything.
TVA territory is a bit different but I'm seeing 15-25% first-year fees as the norm. The key questions are: What exactly are they providing for that fee? Is it just rate analysis or ongoing monitoring? Are they guaranteeing the savings? How long is the commitment? For your size account Steve, I'd expect comprehensive service including quarterly bill review and rate monitoring for anything over 20%.
Georgia Power accounts here - most brokers are in that 15-20% first-year range. But I've learned the fee structure matters less than the actual results. Had a broker charge only 15% but their 'savings' were fantasy numbers based on wrong rate comparisons. Better to pay 20% to someone who delivers real, sustainable savings than 15% to someone who doesn't. Always ask for references and verify their track record.
Good points everyone. I've narrowed it down to two brokers - one charging 18% first-year only, another charging 20% for two years but includes quarterly monitoring and rate change alerts. The second option seems like better value for ongoing service. Both have solid references and transparent methodologies. Going to pass on the upfront fee option completely.
Steve, that ongoing monitoring is valuable, especially with Duke's tendency to adjust rate schedules. LG&E here in Louisville has made several tariff changes over the past few years that affected our clients. Having someone watching for those changes and recommending adjustments is worth the extra fee in my opinion. Just make sure the contract includes specific deliverables for that monitoring service.
Ray makes a great point about rate change monitoring. We missed a beneficial rate schedule change with LG&E a few years ago that cost us $15,000 in the first year alone. Having a broker who's actively watching for those opportunities can easily justify their fees. The key is making sure they're actually doing the monitoring and not just collecting fees on autopilot.
For what it's worth, Puget Sound Energy has been pretty stable on rate structures but I still value the monitoring service. Industrial customers often have operational changes that affect optimal rate selection - new equipment, changed schedules, demand patterns. A good broker should be reviewing your situation at least quarterly and recommending adjustments as needed. That's real value beyond the initial analysis.
Update - went with the broker offering two-year monitoring for 20%. They completed their initial analysis and found $127,000 in annual savings by switching from Schedule LGS to Schedule OPT-V and implementing some demand management strategies. Even with their fees, we're looking at over $100K net savings first year. Sometimes the extra service level is worth paying for.
Excellent results Steve! That's exactly the kind of outcome we all hope for. The Schedule OPT-V option is often overlooked but can provide significant savings for the right load profile. Sounds like you found a broker who really understands Duke's rate structures. Thanks for sharing the follow-up - success stories like this help everyone make better decisions.
Great outcome Steve. That level of savings definitely justifies the broker fees. The demand management piece is often where the real money is hiding. Most facilities focus on energy usage but the demand charges are where you can really move the needle on large accounts. Glad you found someone who understands both sides of the equation.
Fantastic results Steve! This is exactly why broker relationships can be so valuable when done right. The key was doing your homework upfront, asking the right questions about methodology and references, and choosing based on value rather than just lowest fee. Your success story will help other forum members make better broker decisions. Well done.