What is the problem?

For many years, customers have been complaining to OFGEM about poor behaviour by some energy brokers who have included within the energy price paid by the customer excessively high broker fees that were not disclosed. The following is a typical example that is played out in this market all too often:

The risk is greatest for small to medium sized businesses spending less than £2 million per year where buyers have to wear many hats and only think about their energy contracts at most once a year and don’t have the experience to spot all the different tricks employed by rogue energy brokers.

At Noveus Energy we are 100% committed to transparency of our fees and all of the schools that we work with pay us directly for our services; there is no additional broker fee or commission in the energy supply contract. Noveus’ industrial and commercial customers choose to pay a direct fee or a transparent commission.

What is the good news?

In April 2024 OFGEM finally announced that energy suppliers must ensure that their contracts’ principal terms should “clearly display any broker fees. This will apply to non-domestic contracts signed on and from 1 October 2024.”

What have suppliers done to make broker fees transparent?

Since the new transparency rule came into effect on 1 October, all of the suppliers we have reviewed have implemented the new rule in their own way. Suppliers use different terms like “commission”, “TPI Cost” and “Consultant Fee” to describe the payments they make back to the energy broker that’s included within the electricity or gas price. We have collected contract offers from different suppliers and assessed how transparent they are:

1. Clearest Offers

In contract offers from suppliers such as British Gas, Brook Green, Drax, SSE and Yu Energy, the supplier displays somewhere prominent on the contract a table or paragraph setting out the commission in p/kWh and £ total or £ per annum.  Some suppliers give this information for each meter and others summarise for the whole contract.

As a customer you should look out for this table and ensure that you are happy with the level of fees being charged by your broker. If the fees have not been agreed or are more that you have committed to, then you can request that the broker and/or the supplier should amend them in the offer.

2. Quite Clear Offers

Suppliers such as npower, SEFE Energy, Shell Energy, and Smartest Energy show the p/kWh commission prominently in the contract that the customer signs but not the £ total. 

Crown Gas & Power disclose the p/kWh commission in the “Principal Terms” part of their contracts which are a couple of pages of text that follow their table of energy prices.

Where only a p/kWh is shown, then you can request that the supplier and or broker calculates the total annual commission you will be paying or you could ask us to do this for you.

Also, we have seen contracts from Pozitive Energy and Corona Energy which disclose the £ commission but not the p/kWh. TotalEnergies disclose commission in their contracts; the formats are slightly different in electricity and gas offers.

3. You-Need-to-Look-in-the-Right-Place Offers

We are concerned that brokers could try to place customers with EDF Energy or Bryt Energy and not disclose their commission. Therefore we want to guide you to look in the right place:

  • EDF Energy’s offers have a clear table disclosing the p/kWh and £ commission. The problem is that this table is in a separate PDF file and not the contract. EDF Energy’s agreement with brokers obliges them to be transparent and compliant in their dealings with customers. If the broker doesn’t or won’t share the commission PDF then you should speak to EDF Energy directly who will always share the commissions transparently

  • Bryt Energy send their contract prices to brokers in Excel and their Excel tables now include the p/kWh commission. Bryt’s contract says that the Excel table, called “Part 2b”, is part of the contract in the same way as their T&Cs are and they also oblige brokers to be transparent in their dealings with customers. The commission isn’t shown in the PDF contract the customer signs. As above, if the broker doesn’t or won’t share the “Part 2b” spreadsheet with you then you should speak to Bryt Energy directly. Bryt will always share the commissions transparently 

Noveus Energy’s View

The most transparent offer to a customer is a single documents containing the key terms of the contract, the commission in p/kWh and £/annum and all of the suppliers’ terms and conditions. As suppliers update their systems, we encourage them to move to a single comprehensive offer document, especially if customers receive and sign that document electronically.

What must customers do?

Where a customer chooses to pay by commission you should agree a fair rate of commission with the broker and understand what this means in £’s per annum. If the broker won’t disclose the commission or says something like “don’t worry the commission is paid by the supplier” then run a mile. When you are picking an energy broker then you should read Noveus Energy’s guidance note 10 safety rules for energy buyers

Secondly, once you are sent a contact to sign then read it carefully and check you can see that the commission is what you expect and reasonable. We have seen a school with 500 pupils sign a contract where £45,000 commission was clearly disclosed both by the broker and the supplier but the school didn’t question it. 

If you cannot clearly see the commission levels being charged as both a p/kWh and £’s per annum you should not sign the contract. You should ask your supplier for clarification and they have a legal obligation to provide this to you.

Thirdly, you should read Noveus Energy’s latest guidance note Seven extra safety rules for energy buyers. To avoid signing a contract that you might later regret, we give our guidance and  suggest questions like “how do I know the price is competitive?”, “do I understand the product?” and “why should I sign today?” Often suppliers’ contracts are made up of multiple separate contract documents; you must check that your broker has sent you all parts of the contract: Flexible or multi-purchase terms might be in a separate document.  Standard terms and conditions are always in a separate document. Volume tolerance and commission disclosure (as we discussed above) might be in a separate document as well.

If you are having difficulty with any of the above, you are unsure what you are being charged or you don’t understand what you are being asked to sign then please give us a call and we will be delighted to help.

Noveus Energy are a boutique consultancy only working for a limited number of clients thereby ensuring consistent high-quality delivery. We are 100% committed to fee transparency. We see ourselves as part of your team providing strategic energy advice, support and delivery and leaving you free to run your business. Our reward comes from professional satisfaction and an exceptional high client retention rate.

If you’d like to discuss how we can help your business please click here.