Business energy brokers in the UK are paid by suppliers through a commission added to your unit rate, not through a fee you pay directly. Ofgem now requires brokers to disclose this to microbusinesses. Understanding how to identify the uplift in a quote protects you from overpaying.
Last reviewed: 12 May 2026
How Business Energy Broker Commission Works
When a business energy broker arranges a supply contract on your behalf, the broker is paid by the supplier, not by you directly. The payment mechanism is an uplift: the supplier adds a fixed amount per kilowatt hour (kWh) on top of the wholesale cost and their own margin, and passes that uplift to the broker as commission for placing the business.
This means the unit rate you are quoted already contains the broker's payment. There is no separate invoice and no transparent fee line. The commission is invisible unless you know to ask.
This model is called third-party intermediary (TPI) remuneration and has been the subject of sustained regulatory scrutiny by Ofgem. The regulator has documented that the lack of transparency around broker commissions has contributed to businesses paying more than necessary for energy contracts.
The Uplift Mechanism in Detail
The process works as follows. A supplier sets a base rate for business gas or electricity, which reflects wholesale costs, network charges, and the supplier's own margin. When a broker brings a new customer, the supplier adds a per-kWh uplift to that base rate. The broker receives the uplift amount, multiplied by the customer's annual consumption, typically paid as a lump sum at contract inception or in instalments.
Ofgem's non-domestic market review found typical uplifts ranging from 0.5p to over 3p per kWh. Using a 1.5p/kWh uplift as an example: a business consuming 80,000 kWh of electricity annually would generate £1,200 in broker commission embedded in their contract cost. Over a three-year term, the same uplift produces £3,600 in embedded commission.
The uplift applies separately to gas and electricity if both commodities are brokered. A dual-fuel business contract therefore carries two commission layers.
Ofgem Disclosure Requirements
Ofgem introduced requirements under its microbusiness consumer protections that oblige brokers registered under the Ofgem Code of Practice to disclose commission to customers before a contract is signed.
The disclosure must confirm: - That the broker receives a payment from the supplier - The amount of that payment, either as an absolute figure or as a per-unit amount
If a broker quotes a unit rate without confirming these details, and your business qualifies as a microbusiness (fewer than 10 employees, annual turnover or balance sheet total not exceeding 2 million euros, annual consumption below 100,000 kWh electricity or 293,000 kWh gas), the broker is not meeting the minimum standard required under the Ofgem Code of Practice.
For businesses above the microbusiness threshold, the formal requirement is weaker, but Ofgem's direction of travel is toward broader disclosure. Any broker unwilling to disclose commission in writing to any size of business is operating in a way that Ofgem has indicated is inconsistent with good market practice.
How to Read a Quote and Find the Commission
Broker quotes typically present a unit rate (p/kWh), a standing charge (p/day), and a projected annual cost. The commission is not shown separately in standard quote formats.
To identify the approximate commission in a quote, you need a benchmark. The most reliable benchmark is a direct quote from the same supplier for the same contract term and consumption profile. The difference between the direct unit rate and the broker unit rate is the uplift.
If a supplier does not provide direct quotes for your consumption band, you can request commission disclosure in writing from the broker before signing. A broker operating under the Ofgem Code of Practice is required to provide this for microbusinesses. For other businesses, framing the request as a standard due diligence step is commercially reasonable.
Some brokers operate on a fee basis, charging the business directly and passing the supplier's base rate through without uplift. This model is less common but more transparent. If a broker proposes a fixed advisory fee plus a pass-through rate, the total cost comparison with a commission-based quote needs to account for both elements.
Contract Length and Total Commission Exposure
Commission exposure scales with contract length. A 0.5p/kWh uplift on a 50,000 kWh contract costs £250 per year in embedded commission, or £750 over three years. A 2p/kWh uplift on the same contract costs £1,000 per year, or £3,000 over three years.
Longer contracts carry greater commission risk if the uplift is high. They also carry greater risk if energy prices fall, as you remain locked into the uplifted rate. Brokers who consistently recommend three-year or five-year contracts without reference to your business's flexibility needs may be optimising for commission size rather than your interest.
Renewal Commission and the Re-Contracting Problem
When a fixed contract ends and a broker arranges a renewal, a new commission is generated on the new contract. The broker is financially incentivised to recommend renewal through them rather than encouraging you to test the market directly or switch brokers.
This is not illegal, but it is a structural conflict that Ofgem has highlighted. Businesses should treat contract renewal as an opportunity to seek independent comparison, whether that is through a different broker, a direct approach to suppliers, or an energy management consultant who charges a fixed fee.
What to Ask a Broker Before Signing
The questions that should be answered in writing before any business energy contract is signed:
- What is the per-kWh uplift you receive from the supplier on this contract?
- Do you receive any additional payments, including volume bonuses or renewal commissions?
- Are you registered under the Ofgem Code of Practice for TPIs?
- Are you a member of an approved ADR scheme?
- What is the direct unit rate the supplier would offer for this consumption profile without broker involvement?
A broker who refuses to answer questions 1, 3, or 4 in writing should not be given authority to place a contract on your behalf.
Editorial disclaimer: The information on this page is for general guidance only and does not constitute regulated financial or energy advice. Energy pricing and regulatory requirements change. Always verify current rates and rules directly with suppliers and Ofgem before making procurement decisions.
Frequently asked questions
What is a typical business energy broker commission in the UK?
Ofgem has documented uplifts of 0.5p to over 3p per kWh embedded in business energy contracts. The actual amount varies by broker, supplier, and contract length. On a 50,000 kWh annual contract, a 1p/kWh uplift adds £500 to your contract cost per year.
Are business energy brokers required to tell me what commission they earn?
Brokers registered under the Ofgem Code of Practice for Microbusiness TPIs are required to disclose their commission before a contract is signed if your business qualifies as a microbusiness. For larger businesses, the formal requirement is weaker, but you can request disclosure in writing as a standard due diligence step.
Can I find out what the broker commission is on a quote I have received?
You can request written disclosure from the broker directly. For comparison, obtaining a direct quote from the same supplier for the same contract term and consumption profile will show the difference between the base rate and the brokered rate.
Is commission-based broker remuneration legal?
Yes. Commission-based remuneration is the standard model in the UK business energy brokerage market. Ofgem's concern is with non-disclosure rather than the existence of commission. The regulator requires that qualifying businesses are informed of the commission before signing.
What is an energy broker uplift and how does it affect my bill?
An uplift is the per-unit commission amount added to your unit rate. It is paid by the supplier to the broker and is embedded in the rate you see on your quote. It directly increases your energy cost proportionally to your consumption. A 1p/kWh uplift on 100,000 kWh annual consumption adds £1,000 to your annual energy cost.
How we verified this
This article draws on the published guidance from Ofgem, the Department for Energy Security and Net Zero, and the relevant primary legislation listed in the Sources section. No aggregator or supplier-produced content was used as a primary source.
