Pennsylvania Natural Gas Brokers Challenge

Despite inferences to the contrary, Pennsylvania natural gas brokers do not receive commission payments that come out of the pockets of natural gas suppliers. For the most part, their compensation stems from hidden premiums built into the natural gas supply price they provide to their customers. Since brokers don’t take title to natural gas, they are not considered natural gas suppliers. Mostly, natural gas brokers are middlemen to natural gas supply transactions.

Because they are middlemen, most natural gas supply brokers generate revenues through hidden markups built into the natural gas prices they provide to consumers.

When the natural gas broker’s middleman markup is included in the consumer’s natural gas supply price, the consumer bears the cost.

The consumer’s price would be $3.500/MMBtu (supplier’s price of $3.000/MMBtu + Pennsylvania natural gas broker’s markup of $0.500/MMBtu).

The hidden premiums that are embedded into the supply prices provided by natural gas brokers are not regulated by any governing authority. Therefore, they can be as high as the broker chooses.

Natural gas suppliers do not work with every broker. This means that some brokers won’t have access to the best natural gas supply deals (and neither will their customers) .

Without knowing the amount of the natural gas broker’s markup, the natural gas supplier’s actual price is unknown.