Quick summary
This topic affects both small businesses and larger commercial and industrial businesses, but in different ways. Small businesses usually end up on standard retail offers with less negotiating power, while larger energy users are more likely to negotiate a tailored contract and may use a broker to run that process.
If you remember one thing: the retailer is the party that sells you energy and sends the bill, and the broker is an intermediary who helps you choose and negotiate a retailer offer.
Key takeaways
- An energy retailer sells electricity or gas to your premises and bills you for it, with specific legal obligations in most states.
- A commercial energy broker does not sell you energy, they help you compare, negotiate, and manage offers from retailers.
- For small businesses, the biggest broker risk is paying for a service you do not need, or not understanding commissions and lock-ins.
- For larger commercial energy users, the biggest broker risk is weak market coverage, poor contract terms, and misaligned incentives.
- In Victoria, retailer rules are set by the Essential Services Commission, which is separate to the national framework used in several other states.
- Before you sign, ask who is paid what, by whom, for how long, and what happens when you change sites or retailers.
Which type of business does this apply to?
This question applies to both small businesses and larger commercial and industrial businesses, but the buying process is different.
- Small businesses typically use under 100,000 kWh per year, or spend under about $3,000 per month, and are usually on simple retail contracts.
- Larger commercial and industrial businesses typically use over 100,000 kWh per year, or spend over about $3,000 per month, and often negotiate contract terms and pricing.
If you are not sure which group you are in, look at a full year of bills and add up kWh, or check whether you get monthly bills and have a named account manager. Those are common signs you are a larger energy user.
What is an energy retailer?
An energy retailer is the company that sells you electricity or gas for use at your premises and sends you the bill.
- For small businesses, the retailer relationship usually looks like a standard product with set terms, and you accept an offer.
- For larger commercial energy users, the retailer relationship is often a negotiated contract with tailored pricing structures, credit terms, and contract conditions.
What is a commercial energy broker?
A commercial energy broker is an intermediary. They help you compare retailer offers, negotiate contract terms, and manage the procurement process.
- For small businesses, a broker might help you understand a confusing bill, compare your bill, pick between a few offers, or handle a messy account issue.
- For larger commercial and industrial businesses, brokers are often used to run a formal quote process across multiple retailers, test contract terms, and manage timing around contract expiry and risk.
A useful gut-check: if you are signing an energy supply agreement, the retailer is on that agreement. If you are signing an advisory, services, or metering related agreement, that is more likely the broker.
Who regulates retailers, and does that matter for your business?
Retailer regulation matters most for small businesses because customer protections are generally written for smaller users.
In other participating states under the national framework, a person who sells energy to people for use at premises must have either a retailer authorisation or a retail exemption, and retailers must meet entry criteria such as organisational and technical capacity, financial resources, and suitability.
For larger commercial and industrial businesses, retailer regulation still matters, but your commercial leverage and the negotiated contract terms often drive your outcomes more than standard consumer-style protections.
How does each party get paid, and why should you care?
This is where most businesses get stung, mainly because they do not ask the right questions early.
- For small businesses, brokers can be paid via commission built into the rate you accept, and sometimes via separate service fees. Brokers may be paid by a trailing commission for the broker, which is paid by the energy supplier, and some arrangements include service fees for value-added services.
- For larger commercial and industrial businesses, the same payment models exist, but the dollars can be larger, and the contract length can make the total commission meaningful. That can change incentives, so you want transparency.
Minimum practical checks:
- Ask the broker to explain every fee and commission in dollars, not just cents per kWh.
- Ask whether any commission continues if you renew, roll over, or move sites.
- Ask how many retailers will be quoted, and whether any retailers are excluded.
What are the practical differences in what you sign?
This applies to both small businesses and larger commercial and industrial businesses, but the paperwork differs.
- Retailer agreements usually cover supply, pricing, billing, credit terms, and what happens if you exit early.
- Broker agreements usually cover scope of services, fees, term, authority to act, and sometimes ongoing arrangements. Businesses may sign a Direct Metering Agreement with a broker with service fees, and that agreement length can create lock-in risk.
- If you are a small business, a long broker agreement can be a bigger risk than the retailer contract itself.
- If you are a larger energy user, unclear broker authority and weak quote coverage can be bigger risks than the broker term.
When should a small business use a broker, and when should you not?
For small businesses, use a broker if your bills are messy, you have multiple sites, you have had billing problems, or you do not have time to compare energy plans properly.
If you do use a broker, treat them like any adviser. Get clarity on what the outcome will be for your business.
When should a larger commercial energy user use a broker, and when should you not?
A broker can add real value when you need a structured market process, when contract terms matter as much as price, or when you want to test different risk options.
Make sure the broker is running a process you can audit: who was asked to quote, what data they used, and what assumptions were baked into the pricing.
Comparison table: Broker vs retailer
Checklist: Questions to ask before you appoint a broker or accept a retailer offer
- Who is the counterparty on the energy supply contract, and who is the counterparty on any service or metering contract?
- How is the broker paid, exactly, and for how long does that payment continue?
- How many retailers will be invited to quote, and will I see all offers received?
- What data will be used to price the offer, and what happens if my usage changes materially?
- What are the exit terms if I sell the business, relocate, or close a site?
- If there is a dispute, who do I contact first, and what authority does the broker have to act?
FAQs
Is a commercial energy broker the same thing as an energy retailer?
A commercial energy broker and an energy retailer have different roles. The retailer sells electricity or gas to your premises and bills you, while a broker is an intermediary who helps you compare and negotiate retailer offers. This matters because you will usually have different contracts, different fees, and different dispute pathways depending on whether the issue sits with the broker’s service or the retailer’s supply.
How do brokers get paid in Australia?
Broker payment depends on the deal structure. Some arrangements include commission paid by the supplier as part of the rate, and some include separate service fees for additional work. Brokers may receive trailing commission paid by the supplier and may also charge fees under a Direct Metering Agreement. You should ask for full fee and commission disclosure.
If something goes wrong, do I complain to the broker or the retailer?
It depends on the problem. Billing errors, supply issues, and contract enforcement normally sit with the retailer because the retailer is the seller and biller. Service quality issues, procurement disputes, or questions about fees often sit with the broker if that is what you engaged them for. For small businesses, retailer conduct is more clearly covered by retail rules.
Does Victoria treat energy retail differently to other states?
Yes. Victoria has its own retail rulebook administered by the Essential Services Commission. The Energy Retail Code of Practice sets out rules retailers must follow when selling energy to Victorian customers, including matters like contracts, billing disputes, and bill content. Several other states use the national retail framework approach, where selling energy generally requires a retailer authorisation or exemption.
Can a broker lock me in even if I change retailers later?
It can happen, depending on the broker agreement you sign. Some broker arrangements include ongoing service terms, authority to act, or fee structures that continue beyond the initial contract you sign with a retailer. The Queensland Small Business Commissioner warns about matching the length of broker agreements to retailer agreement length, so you are not locked into the broker after the rate expires.
What should a larger commercial energy user ask for in a broker-run tender?
Larger energy users should ask for a process you can audit. That includes the list of retailers invited to quote, the data set used, the pricing assumptions, and a clear comparison of contract terms, not just cents per kWh. Because contracts are often tailored, you should also ask how pass-through items are treated and what happens if your load or operating hours change.
Do retailers have to be authorised to sell energy?
In states using the national framework, selling energy to people for use at premises generally requires either a retailer authorisation or a retail exemption. That matters because authorisation comes with obligations and entry criteria. In Victoria, retailing is handled through licensing by the Essential Services Commission, with its own rules for retailers.
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