Follow Brad Foster
Subscribe to blog to get pertinent insights about energy supply and utilities.
- Energy Broker Commission: The Truth Revealed
- Broker to Broker Outsourcing Leading to Fat Energy Supply Prices
- Fake Energy Consultants Two-Timing Consumers with Double-Dip
- Going Once, Going Twice – Sold! Bad Energy Deals to Consumers in the Dark
- Businesses Hoodwinked By Energy Brokers Dodging Upcharge Disclosure
Energy brokers often utilize a sales tactic that creates a false perception that energy brokering services are free for the energy consumer. Brokers commonly tell the consumer that “there is no cost” to engage the broker. This sounds really appealing; but, this is a strange twisting of words that ultimately translates into significantly inflated energy supply prices for the consumer.
When brokers use this phrase, they are speaking in code.
What the consumer hears: My employer will not incur costs to engage the broker.
What the broker means: You will not receive an invoice from us.
This is deceptive. How?
Two ways. First, the energy supply price provided by the broker includes an undisclosed upcharge. In other words, the price from the energy supplier itself is lower than the price the broker provides the consumer. The broker adds an upcharge to the energy supplier’s original price. The undisclosed upcharge is the energy broker’s compensation. When energy broker’s claim “there is no cost to you”, what they are really saying is “there is no cost to you – that you know of.” There is a cost to the consumer – the consumer just doesn’t see it. Its built into the energy supply price as an upcharge. Energy brokers determine the amount of the upcharge themselves. This has led to significant upcharge abuse by energy brokers, and ultimately inflated energy supply prices for consumers.
Second, the energy supplier collects the broker upcharge for the broker. Its just not explained that way to the energy consumer. The upcharge is built into the energy supply price. This is why the broker doesn’t have to provide an invoice for their services. In essence, the energy supplier does – on the broker’s behalf.
Ultimately, there is an “invoice” from the broker for broker upcharges. That is because there is a cost to engage the broker (but the consumers are told there isn’t), and the energy supplier invoices for the broker’s services for the broker (consumers aren’t told this either).
If you don’t believe me, ask any energy supplier.