Guides/Transparency

The Truth About Broker Commissions

"My service is free to you."
It is the most common lie in the energy industry. Here is exactly how brokers get paid, how much they make, and how to spot hidden fees in your contract.

The "Supplier-Paid" Shell Game

Brokers are not charities. When they say "the supplier pays us," what they mean is: "We added a margin to your rate, and the supplier collects it for us."

The "Base Rate" (Wholesale)

6.5¢ /kWh

What the supplier offers.

Your Rate (Retail)

7.2¢ /kWh

+0.7¢ Broker Fee

What you sign for.

Understanding "Mills"

Broker fees are measured in "mills" (percentages of a penny). A typical fee is 5 mills (0.5¢/kWh). It sounds small, but let's do the math for a standard manufacturing plant using 5,000,000 kWh/year.

Usage: 5,000,000 kWh

Fee: $0.005 (5 mills)

Total Commission: $25,000 per year

($75,000 over a 3-year contract)

Red Flags in Your Contract

Most brokers try to hide this fee. Review your contract's "Terms and Conditions" or the "Letter of Exclusivity" for these phrases:

  • "Supplier shall pay Broker a fee based on Customer's usage..."
  • "Brokerage fee included in theEnergy Charge..."

The Transparent Alternative

There is nothing wrong with being paid for service. The problem is conflict of interest. If a broker is paid per-kWh, they are incentivized to:

  1. Sign you for longer terms (to lock in 3-5 years of fees).
  2. Ignore efficiency projects (burning less energy means they get paid less).

The KilowattLogic Pledge

We believe in Flat-Fee Consulting or fully disclosed margins. You see exactly what the supplier charges and exactly what we charge. No hidden multipliers. No conflict of interest.

Check Your Rate Fairness