A business energy broker can unlock supplier panels and save procurement time, but adds a commission layer into your unit rate. Going direct suits businesses with time, energy market knowledge, and straightforward consumption profiles. This guide explains the mechanics of both routes so the decision is yours.
Last reviewed: 12 May 2026
What a Business Energy Broker Actually Does
A business energy broker, also called a third-party intermediary (TPI), acts as a procurement agent between your business and gas or electricity suppliers. The broker approaches multiple suppliers on your behalf, collects competing quotes, and presents a recommended contract.
The broker is not a regulator or an independent adviser in the way a financial adviser is. Brokers are paid by suppliers, typically through a commission embedded in the unit rate you are quoted. Ofgem has noted that this creates a structural conflict of interest that businesses should understand before appointing a broker.
Brokers range from large national firms with automated comparison platforms to small regional operations that handle a handful of clients. The size of the broker influences how many suppliers they have panel relationships with, which directly affects the range of quotes they can obtain.
The Market Access Argument for Using a Broker
Some gas and electricity suppliers in the UK business market do not accept direct applications from smaller businesses. They route all SME enquiries through registered brokers. If your business falls into this category, using a broker is the only way to access certain tariffs.
For larger businesses, the panel access argument weakens. Suppliers typically have dedicated direct teams for I&C (industrial and commercial) customers with high consumption profiles. If your annual electricity spend exceeds roughly £50,000, going direct to suppliers' business development teams is usually viable.
The number of quotes a broker can generate in a single process is also relevant. Approaching five or six suppliers directly, obtaining comparable quotes, checking contract terms, and following up is a significant administrative task. For a business owner without a procurement function, the time cost is real.
The Commission Layer and How It Appears in Your Quote
When a broker places your contract, the supplier pays the broker a commission. This is typically structured as an uplift on the unit rate, measured in pence per kilowatt hour (p/kWh). Ofgem's review of the non-domestic retail market found uplifts ranging from 0.5p to over 3p per kWh depending on the broker, supplier, and contract length.
On a 12-month contract for a business consuming 50,000 kWh annually, a 1p/kWh uplift adds £500 to the contract cost. A 2p uplift adds £1,000. The commission is not shown as a line item unless you ask.
Ofgem introduced requirements under its non-domestic retail market reforms for brokers to disclose commission to customers. Brokers registered under the Ofgem Code of Practice for Microbusiness Consumers are required to disclose the absolute amount or per-unit amount of any payment they receive. If a broker quotes you without confirming their remuneration, that is a red flag under Ofgem's current framework.
You can ask any broker to show you the wholesale rate and the uplifted rate separately. A broker unwilling to do this should not be used.
When Going Direct Saves Money
Going direct eliminates the commission layer. If you obtain the same contract directly from a supplier at the wholesale rate the broker would have quoted at, the saving is the full uplift amount.
In practice, the saving depends on how effectively you can negotiate. A business without procurement expertise contacting a supplier directly may receive a standard published rate that is no more competitive than a brokered quote. Suppliers price direct SME contracts on volume and risk; they do not automatically pass commission savings back to direct customers.
Going direct works best when you have a high annual consumption (above £30,000 in energy spend), an existing relationship with a supplier, the ability to compare at least three direct quotes simultaneously, and time to review contract terms including out-of-contract rates, rollover clauses, and termination provisions.
Comparing the Two Routes: A Practical View
| Factor | Using a Broker | Going Direct |
|---|---|---|
| Market access | Wider for SMEs; some suppliers broker-only | Limited to suppliers with direct sales teams |
| Time cost | Low - broker manages the process | Higher - you contact each supplier |
| Commission | Embedded in unit rate (0.5p-3p/kWh typical) | No broker commission |
| Transparency | Requires active disclosure request | Price is what supplier quotes |
| Suitable for | Time-poor SMEs, complex multi-site contracts | High-consumption businesses with procurement resource |
| Risk | Broker conflict of interest if undisclosed commission | Risk of missing competitive broker-only rates |
Multi-Site and Complex Contracts
For businesses with multiple premises, complex half-hourly metering requirements, or renewable energy purchasing commitments, brokers with specialist expertise can add genuine value beyond simple quote aggregation. Coordinating contracts across sites to align termination dates, managing deemed-rate periods between tenancies, and advising on flexible purchasing structures are tasks where a knowledgeable broker earns their commission.
If a broker is offering only a basic comparison service for a single-site SME, the value proposition is thinner and the commission less justified.
Contract Length and the Renewal Trap
One area where broker and direct routes both require attention is contract length and renewal. Fixed-term contracts of 12, 24, or 36 months are standard. Automatic rollover into a new fixed term if notice is not given within the notice window is a known risk.
Ofgem's microbusiness rules now restrict rollover into out-of-contract rates for qualifying microbusinesses, but the rollover into a new fixed term at potentially worse rates remains possible. Whether you use a broker or go direct, you need a calendar reminder for contract end dates and awareness of notice periods (typically 30 to 90 days before the end date).
A broker managing your contract renewal is not automatically acting in your interest at that point. Their commission incentive resets with a new contract.
What Ofgem Says About Broker Use
Ofgem regulates the non-domestic retail energy market and has published guidance on TPI conduct as part of its ongoing market reforms. Ofgem's position is that brokers can play a useful role in the market but that the embedded commission model has historically led to poor outcomes for some businesses.
The Ofgem Code of Practice for Microbusiness TPIs sets out minimum standards including commission disclosure, conflict of interest statements, and complaints handling. Membership of the Energy Ombudsman scheme provides redress if a broker's conduct causes financial loss.
For businesses above the microbusiness threshold, the formal protections are weaker. The Energy Ombudsman can handle complaints from businesses with fewer than 50 employees and an annual turnover below £6.5 million. Larger businesses should rely on contract terms and, if necessary, civil routes for broker disputes.
How to Verify a Broker Before Proceeding
Before appointing a broker, the minimum checks are: confirmation of registration under Ofgem's TPI Code of Practice or equivalent, membership of an approved ADR (alternative dispute resolution) scheme, written confirmation of commission disclosure, and a Companies House search to verify the firm's trading history.
A broker who cannot confirm Ofgem code registration and ADR membership in writing should not be given authority to approach suppliers 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 frequently. Always verify current rates and rules directly with suppliers and Ofgem before making procurement decisions.
Frequently asked questions
Do business energy brokers have to disclose their commission?
Under Ofgem's Code of Practice for Microbusiness TPIs, brokers must disclose the commission or uplift they receive when arranging a contract for qualifying microbusinesses. For larger businesses, formal disclosure requirements are less prescriptive, but you can request commission information in writing from any broker before signing.
Can I go directly to a business energy supplier without using a broker?
Yes, most major suppliers have direct business sales teams. However, some suppliers route all SME enquiries through registered brokers and do not accept direct applications from smaller businesses. Calling a supplier's direct business line will confirm whether a direct quote is available for your consumption size.
How much commission does a business energy broker typically make?
Ofgem has documented typical uplifts of 0.5p to over 3p per kWh embedded in the unit rate. On a 50,000 kWh annual contract, that is between £250 and £1,500 added to the contract cost. The exact amount varies by broker, supplier, and contract term.
Is using a broker cheaper than going direct?
Not automatically. A broker adds a commission layer that increases the effective unit rate. However, if a broker accesses supplier-exclusive tariffs or negotiates effectively on your behalf, the overall cost may still be lower than an uncompetitive direct quote. Comparing both routes with equivalent consumption data is the only way to know.
What happens if a broker gives me bad advice on a business energy contract?
If the broker is a member of the Energy Ombudsman scheme and your business qualifies (under 50 employees, turnover below £6.5 million), you can submit a formal complaint. For businesses outside that threshold, the dispute would need to be pursued through contract law. Ofgem also accepts reports about TPI misconduct.
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.
