If you’ve ever wondered why two brokers quoted you wildly different unit rates for the same supplier on the same day, the answer is almost always commission.
business energy broker Fees Explained: What SMEs Actually Pay” loading=”eager” />Most UK SMEs assume a business energy broker is paid by the supplier out of some central pot. In reality, you pay — through a quiet uplift added to every kilowatt-hour you’ll use for the next one to five years. This guide explains how those fees actually work, what Ofgem now forces brokers to disclose, and how to negotiate them down (or out) at renewal.
How business energy brokers actually get paid
Business energy brokers (sometimes called TPIs — third-party intermediaries) earn money in one of three ways:
- Uplift commission: a few pence per kWh added to the supplier’s wholesale-plus rate, paid to the broker by the supplier over the life of the contract.
- Flat fee: a one-off invoice to the customer, typically £300–£2,000 depending on site size.
- Retainer or consultancy: a monthly fee for ongoing bureau services, bill validation and procurement advice — more common with larger portfolios.
For SMEs on one or two meters, uplift is by far the dominant model. It’s attractive to brokers because the customer never sees a bill from them, and attractive to suppliers because it shifts the cost of sale onto the end user without appearing on any invoice line.
The uplift trick: how commission hides in your unit rate
Here’s the mechanic. A supplier prices a contract at, say, 24.5p per kWh wholesale-plus. The broker asks the supplier to build in 1.5p of commission. You’re quoted 26.0p. The supplier collects 26.0p from you, keeps 24.5p, and pays 1.5p back to the broker every time you use a unit.
On a typical SME consuming 40,000 kWh of electricity a year, that 1.5p uplift costs you £600 annually, or £1,800 across a three-year contract. You won’t see it on your bill. You won’t see it on the contract. Until very recently, you had no legal right to be told.
Uplifts of 0.5p to 3p per kWh are normal. Anything above 3p on a standard SME contract is, in our view, excessive and worth challenging.
Typical broker fee ranges by contract length and consumption
Commission generally scales with contract length, because the broker is paid per unit consumed across the full term. Rough benchmarks we see in the UK market:
- Micro-business (under 25,000 kWh/year): 0.8p–2.5p per kWh uplift, or a flat fee of £150–£500.
- Small business (25,000–100,000 kWh/year): 0.5p–2.0p per kWh, often on 2–3 year contracts.
- Mid-market (100,000–500,000 kWh/year): 0.3p–1.2p per kWh, with more room to negotiate fixed fees.
- Half-hourly metered sites: usually 0.2p–0.8p per kWh, sometimes charged as a standing daily fee.
Gas commissions tend to be lower in pence terms (0.1p–0.6p per kWh) but consumption is higher, so the cash value is similar. A pub using 150,000 kWh of gas at a 0.4p uplift is handing over £600 a year without knowing it.
Ofgem’s new transparency rules and what brokers must disclose
After years of complaints from small businesses, Ofgem extended its retail market rules to third-party intermediaries. From late 2024, suppliers must only work with brokers who are signed up to a recognised redress scheme, and brokers dealing with micro-businesses must disclose their commission in writing before a contract is signed.
In practice, that means you should now receive:
- A written statement of the total commission the broker will earn across the contract term, in pounds and pence.
- The pence-per-kWh uplift expressed separately from the supplier’s rate.
- Details of the broker’s membership of an approved ombudsman scheme (such as the Energy Ombudsman).
If a broker won’t put commission in writing, that’s no longer just bad practice — it’s a compliance issue. The Department for Energy Security and Net Zero has signalled further protections may extend the micro-business rules to all SMEs, so the direction of travel is clear.
Questions to ask before signing (and red flags to walk away from)
Before you sign anything, ask the broker these five questions in writing:
- What is the supplier’s underlying unit rate, and what is your uplift in pence per kWh?
- What is the total cash value of your commission across the contract term?
- Are you paid any additional bonuses, overrides or volume incentives by this supplier?
- Which redress scheme are you a member of, and what’s your membership number?
- If I go direct to the supplier today, what rate would I get?
Red flags that should make you walk away:
- Refusal to disclose commission in writing, or vague answers like “it’s built into the rate.”
- Pressure to sign same-day because “prices are moving” — wholesale prices do move, but a reputable broker will hold a quote for at least 24 hours.
- Letters of Authority that grant the broker power to sign contracts on your behalf. Sign quotes yourself.
- Auto-renewal clauses buried in the terms, or rollover contracts you didn’t actively agree to.
- No written contract summary showing unit rate, standing charge, term length and end date.
How to negotiate or remove broker commission at renewal
Renewal is your leverage point. Suppliers would rather retain you at a thinner margin than lose you to a competitor, and brokers would rather take a smaller cut than nothing. A few tactics that work:
Ask for a zero-commission quote alongside the standard one
Most brokers can run a “net” rate — the supplier’s price with no uplift — and charge you a flat fee instead. For a single-meter SME, a £400 flat fee usually beats a 1p uplift by a wide margin.
Get a direct quote from the supplier as a benchmark
Call the supplier’s SME team and ask for their direct rate on the same product. The gap between that and the broker’s quote is, roughly, the commission. Use it to negotiate.
Tender to two or three brokers simultaneously
Make it clear you’re comparing. Ask each to disclose commission upfront. The one who won’t is the one to drop.
Don’t let the contract roll over
Out-of-contract and deemed rates are typically 30–80% more expensive than a negotiated deal. Diarise your contract end date and start shopping 4–6 months out.
For a deeper walk-through of procurement options, see our business energy hub.
Broker vs direct vs in-house procurement: which wins for SMEs
There’s no single right answer — it depends on how much time you have and how complex your estate is.
- Going direct works well if you have one or two meters, stable consumption, and a spare afternoon every three years. You’ll avoid broker uplift entirely, but you’ll only see the rates of suppliers you call.
- Using a broker saves time and gives you wider market coverage. The trade-off is commission — which is fine, provided it’s disclosed and reasonable. A good broker earns their fee in bill validation, contract management and avoiding rollover penalties.
- In-house procurement (a part-time energy manager or a finance lead who owns it) makes sense once you hit roughly 500,000 kWh a year or five-plus sites. Below that, the numbers rarely justify the headcount.
For most SMEs procurement managers we speak to, a broker on a disclosed flat fee is the sweet spot — market coverage without the opaque uplift.
It’s also worth cross-checking any savings claims against independent coverage. BBC Business and consumer guidance from Which? regularly publish comparisons of supplier behaviour in the non-domestic market.
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Frequently Asked Questions
How much commission does a UK business energy broker charge?
UK business energy brokers typically charge 0.5–2 pence per kWh as commission, built into the supplier’s unit rate (this is called “uplift”). On a 100,000 kWh/year contract that works out at £500–£2,000 a year. Larger volumes pay smaller per-kWh commissions; SME contracts sit at the higher end.
Are business energy brokers regulated?
UK business energy brokers operate under the Ofgem Third Party Intermediary (TPI) Code of Conduct. From 2024 onwards Ofgem has required brokers to disclose commission in writing before contract sign-off. Brokers are not “licensed” in the same way as suppliers, but must follow consumer-protection rules and offer access to ADR (alternative dispute resolution).
Can I get a business energy quote without using a broker?
Yes — you can call any UK supplier directly and ask for a quote. The trade-off is that you only see one supplier’s rates, not the whole market, and you do all the admin (LOA, comparison, switching) yourself. For most SMEs a broker saves more time and money than they cost — but it pays to ask for a zero-commission quote alongside the standard one to verify.
What is “uplift” in business energy contracts?
Uplift is the broker’s commission added to the supplier’s wholesale unit rate. For example, a supplier may price the wholesale rate at 22p/kWh; the broker adds 1p uplift, and you sign at 23p/kWh. The supplier pays the 1p back to the broker as commission. Uplift is now subject to Ofgem disclosure rules.
How do I get the broker fee removed at renewal?
Three options: (1) ask the broker for a zero-commission quote alongside the standard one; (2) tender to two or three brokers in parallel and let them compete; (3) get a direct quote from the supplier as a benchmark. Whichever you pick, do it 1–6 months before contract end during your switching window — see how to switch business energy for the full timeline.
The bottom line
Broker fees aren’t inherently bad — brokers do real work and deserve to be paid. The problem is opacity. An uplift of 1p per kWh that you weren’t told about feels very different from a £400 flat fee you agreed to upfront, even if the cash value is similar.
Ofgem’s rules have tilted the balance towards disclosure, but the onus is still on you to ask the questions. At your next renewal, demand commission in writing, benchmark against a direct quote, and don’t be afraid to walk. The savings are usually measured in hundreds or thousands of pounds per year — real money for a real business.
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