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What's The Difference

28th Jul 2014

Is there a difference between an energy broker and an energy consultant?

Gaining expert advice and price comparisons from a broker is not always the right thing to do for your business.

Some businesses view brokers as great value and worth the money invested, however other businesses view brokers as a waste of time and getting the best price is something I can do myself.

A consultant will advise you on when to purchase energy, provide up to date tariffs and provide support and advice for your portfolio. A broker will complete a pricing exercise only concentrating on savings rather than portfolio management.

So the first step is to establish is there a need to complete an outsourcing exercise for my business? A large organisation with annual spend over £1 million pounds on energy is highly recommended to use a consultant, due to the number of sites involved and the complex areas of procurement and legislation. If the energy portfolio is not being monitored and reviewed effectively price increases will occur.

Regular issues that often face these businesses are:

  • Rising commodity prices
  • Lack of software, people or MAT system
  • Changing legislation
  • Little time or no time
  • Unaware of changing tariffs and products within the market place
  • No strategic plan in place to manage different commodities.

A small hotel or retail outlet with a spend of up to £12,000 per year it would be recommended they go direct to an energy supplier. Why, you ask? Let me ask you a simple question

If you went to purchase a car and someone said to you this car is absolutely free you just have to pay for the fuel would you believe them?

Being transparent, honest and friendly are the most important key factors when building a working relationship.  There are many brokers in the industry today who state they service is free of charge but this is simply isn’t true.  Both brokers and consultants make their fee’s through a fixed fee invoice inclusive or a brokerage is included in all the quotations provided. Either way the customer pays for the service. For SME’s the likeliness of achieving savings whilst going through a consultant may be minimal and may cost the business more money.

The industry is vast growing so how do you ensure you outsource your requirements to someone you can trust?  

1 – Unlocking Jargon – Whether you are looking for a broker or consultant ensure all services, products and pricing is transparent and communicated. Jargon often accompanies this industry resulting in price increases and ineffective risk management

2 – Independency – Choose a company who are independent.  This will provide a variety of products and services from different suppliers that are competitive. Does the company state who they work with on their website?

3 – Reputation – Choose a company who are well established and ask for testimonials and case studies. Look at the company’s history are they award winning? Do they help their local community? You can guarantee if they have a good reputation they will look after your account.

4 – Energy market knowledge – ensure they understand the energy market and reports they provide are their own. If they have to use reports from other companies is the knowledge there? Find out. And have they got experience in your industry?

5 – Strategy – Does the company provide a procurement strategy service based around your business’s requirements? And get references ask to speak to a customer they dealt with so you can ask questions direct.

6 – Ask for a price breakdown – How much does the company charge. A professional consultancy firm will advise you how much they earn from the meeting you have, alternatively email for a price breakdown. This will ensure no hidden or double charges are incurred.

7 – Regular contact and review – the company you choose should have a review process. Ensure meetings are held regularly to discuss your account and you have one main source of contact at all times. No call centres please.

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