| TL;DR: Most energy brokers are paid commission by the supplier, usually added as a small uplift on every unit of energy you use for the life of the contract, rather than as a visible fee. There is generally no legal requirement for a broker to disclose this amount unless you ask. Last reviewed July 2026 |
| BUSINESS ENERGY : HOW BROKERS ARE PAID |
Energy brokers, formally called third party intermediaries or TPIs, are typically paid by the energy supplier rather than the customer, most commonly through a commission built into the unit rate as a small per-unit uplift added on top of the underlying wholesale-plus-margin rate. This commission is usually invisible on a normal bill, and there is currently no general legal requirement for a broker to disclose the amount unless the customer specifically asks.
KEY FACTS
|
Why a broker's fee is not what it looks like
When a business uses a broker to arrange an energy contract, it is easy to assume the broker is simply a free comparison service, since no invoice for their services typically arrives. In most cases, the broker is instead paid by the energy supplier, funded by a commission built into the price the business ends up paying, most commonly as a small addition to the unit rate charged for every kilowatt hour of gas or electricity used over the life of the contract.
Because this commission is embedded in the unit rate rather than itemised separately, it is genuinely difficult for a business to see how much of what they are paying each month is the underlying cost of energy and how much is commission being paid to the broker who arranged the deal, unless they specifically ask and receive a clear answer.
How the commission is typically structured
The most common structure is a per-unit uplift, a small number of pence added to every kilowatt hour on the contract, which accumulates over the contract term into a total commission payment that scales with how much energy the business actually uses. A high-consumption business on a long contract term can end up paying considerably more in total commission than a smaller business on a similar per-unit uplift, purely because of usage volume.
Some brokers instead charge a one-off fixed fee, either to the supplier or occasionally directly to the customer, which does not scale with usage in the same way. A smaller number of brokers operate on a transparent consultancy fee model, charging the customer directly for their time and expertise rather than earning commission from whichever supplier the business ultimately signs with.
Why the payment structure can affect the advice you receive
Because a commission-based broker's income depends on the customer signing a contract, and because commission rates can differ between suppliers for the same broker, there is an inherent incentive for a broker to favour whichever supplier and contract structure pays the broker the most, which is not necessarily the same as the deal that is genuinely best value for the customer.
| Payment model | Who pays the broker | Potential incentive issue |
| Commission built into unit rate | Supplier, funded by the customer's usage | May favour higher-commission suppliers over better value ones |
| One-off fixed fee to supplier | Supplier, one-off rather than ongoing | Less usage-scaling issue, but supplier choice may still be influenced |
| Consultancy fee paid by customer | Customer, directly and transparently | Aligns incentive toward genuinely best value, since fee does not depend on supplier chosen |
Why this has attracted regulatory attention
The lack of mandatory disclosure around broker commission in the business energy market has been the subject of increasing scrutiny, including media investigations highlighting cases where commission was added to contracts without the customer's clear knowledge, sometimes increasing further on contract renewal without the customer being told, and cases where businesses on deemed or variable rates were found to be carrying particularly high embedded commission.
Ofgem is developing specific regulation of third party intermediaries operating in the non-domestic energy market, intended to bring greater transparency and consistent standards to how brokers operate, including around disclosure of how they are paid, reflecting the scale of concern this issue has generated across the sector.
What questions are reasonable to ask a broker
Asking a broker directly how much commission they will earn on a proposed contract, expressed in pounds over the contract term rather than only as a pence-per-unit figure, is a reasonable and increasingly common question, and a broker operating to good industry practice should be able to answer clearly rather than deflecting the question.
It is equally reasonable to ask whether the broker has considered suppliers who pay lower or no commission, and whether the quotes presented represent the full range of the market or only the suppliers with whom the broker has a commission-paying relationship, since not every broker works with every supplier.
Checking directly with the supplier as a comparison
A useful way to sense-check a broker-arranged quote is to approach the same supplier directly, or through a different broker, and compare the rates offered, since a meaningful difference between a broker-arranged rate and a directly negotiated rate for the same usage profile can indicate the size of the commission built into the broker's version.
This is not always straightforward for a smaller business without existing supplier relationships, but for a larger consumer with the negotiating position to approach suppliers directly, this comparison can be a genuinely useful check on whether a broker-arranged deal represents good value once commission is accounted for.
Why choosing a transparent-fee broker is worth considering
For a business uncomfortable with the incentive structure created by commission-based broking, seeking out a broker who operates on a transparent, customer-paid consultancy fee model removes the underlying conflict of interest, since the broker's income no longer depends on which supplier or contract structure is ultimately chosen.
This does not automatically mean every commission-based broker gives poor advice, since many operate professionally and in the customer's genuine interest despite the commission structure, but understanding exactly how any broker you use is paid, and being comfortable with the answer, is a reasonable and increasingly expected part of choosing who arranges a business energy contract.
Why this matters most on longer contracts
Because commission is typically built into the unit rate and accumulates with every unit consumed, the total commission paid over a three or four year contract on a high-consumption site can be a genuinely large sum, considerably more than the same commission structure would generate on a shorter, one-year contract. This is a further reason to ask about commission specifically before signing a longer-term contract, since the cumulative effect compounds with both usage and contract length together.
Why smaller businesses are particularly exposed
A smaller business without dedicated procurement expertise is often less likely to ask detailed questions about commission structure than a larger organisation with an in-house energy or procurement function, which can mean smaller consumers are disproportionately exposed to higher embedded commission simply because they are less equipped to negotiate or scrutinise the arrangement being offered to them.
| Note: Broker commission structures and disclosure practices vary between firms and are subject to upcoming regulatory change. Ask any broker directly how they are paid before signing a contract they have arranged. |
| RELATED GUIDES |
| Disclaimer: Kael Tripton Ltd is an independent editorial publisher, ICO-registered (ZC135439). This guide is general information, not financial, legal or tax advice, and carries no commission, referral fee or lead-routing arrangement with any supplier or broker. Figures and thresholds change; verify current numbers with the primary sources listed below. |
Frequently asked questions
Do I pay an energy broker directly?
Usually not. Most brokers are paid commission by the supplier, funded by a small uplift built into the unit rate the customer pays, rather than a direct fee.
Can I ask a broker how much commission they are earning?
Yes. This is a reasonable question, and a broker following good industry practice should be able to answer clearly, ideally in pounds over the contract term.
Is broker commission going to be regulated?
Ofgem is developing specific regulation of third party intermediaries in the non-domestic energy market, expected to increase transparency requirements around how brokers are paid.
Is there an alternative to commission-based brokers?
Yes. Some brokers operate on a transparent consultancy fee paid directly by the customer, which removes the incentive to favour higher-commission suppliers.
| SOURCES |
