How Energy Brokers Manipulate Electricity Prices and Natural Gas Prices to Embed Hidden Upcharges: Part 2 – The “Stuff & Fluff” Tactic
If you care about business ethics (and significantly inflated energy prices), this is for you. This blog introduces a tactic commonly used by energy brokers that takes advantage of energy consumer vulnerability and trust with the objective of maximizing (not just establishing) hidden upcharges that are embedded in energy supply prices, at the expense of the energy consumers they are supposed to be “helping.” A follow up post will include an example of how energy brokers orchestrate this tactic.
What is this tactic? I call it the “Stuff & Fluff” tactic.
The “Stuff & Fluff” tactic is diabolical, and here’s why. The thing that energy consumers trust to get from energy brokers is what energy brokers use to take advantage of the energy consumers. This “thing” is multiple quotes from energy suppliers.
Energy consumers work with energy brokers under the pretense that energy brokers will create competition between multiple energy suppliers, and that this competition will result in the lowest energy supply cost. When energy brokers present multiple offers to energy consumers, energy consumers are left with the impression that the mission has been accomplished. Energy consumers believe that they are looking at the most competitive representation of the “market”.
However, this impression is false.
Why, because the prices are not the “market”. The prices have been manipulated to create an outcome that allows the energy broker to maximize their hidden upcharge. More precisely, the energy broker manipulates the prices to steer the energy consumer to the lowest offer that maximizes the hidden upcharge. Energy consumers that work with energy brokers are inherently vulnerable to this tactic. This is because energy brokers know that energy consumers that work with them don’t know what the market should be. That’s why the energy consumer decided to work with an energy broker in the first place. Energy brokers that use the “Stuff & Fluff” tactic take advantage of the vulnerability to maximize hidden upcharges at the expense of the energy consumers that they are supposed to be “helping.”
An example of how the “Stuff & Fluff” tactic is orchestrated by energy brokers will be included in the next blog post.
This is Part II of a series of blog posts designed to help consumers understand and avoid the significant cost consequences of engaging an energy broker under the false pretense of a “no cost to you” energy procurement service by exposing the methods energy brokers use to secretly embed a hidden upcharges into energy supply prices, which can amount up to 25% of the total energy supply cost. Part I introduced the basics. You can read Part 1 to learn the basics.