Quick summary
A commercial electricity broker is a third party who helps businesses compare electricity retailers, review tariff structures and negotiate supply contracts. They do not sell electricity. Instead, they access the retail market on a business's behalf, request quotes from multiple retailers and manage the switching process. Most brokers are paid by the retailer, not the business, through a margin embedded in the quoted rate.
Key takeaways
- A commercial electricity broker is not an electricity retailer. They are an intermediary who works on the business's behalf.
- Brokers access the National Electricity Market by approaching multiple authorised retailers and comparing quotes against your usage profile.
- Most brokers are paid through a commission embedded in the electricity rate, not an upfront fee charged to the business.
- Electricity-specific brokers focus on power procurement only, covering tariff types such as demand charges, network costs and time-of-use rates.
- Businesses consuming above certain annual thresholds can negotiate electricity contracts through the retail market rather than relying on standing offer rates.
What does a commercial electricity broker do?
A commercial electricity broker manages the electricity procurement process for a business. This includes reviewing your current contract and bill, approaching multiple retailers for quotes, comparing pricing structures, negotiating contract terms and coordinating the switch from your existing retailer.
The broker also helps interpret tariff components including network charges and demand fees. These are often the most complex parts of a commercial electricity bill and the areas where two otherwise similar offers can differ most in total cost.
How is a commercial electricity broker different from an electricity retailer?
An electricity retailer buys electricity in the wholesale market and sells it to businesses and households. All electricity retailers in Australia must hold a retail authorisation issued by the Australian Energy Regulator. A broker does not buy or sell electricity and does not require retailer authorisation.
A broker acts as an intermediary, representing the business's interests when approaching retailers for quotes. They compare offers from multiple authorised retailers and help the business choose and switch to the best-fit contract.
How does a commercial electricity broker access the electricity market?
The retail electricity market in Australia operates through the National Electricity Market (NEM), which covers Queensland, New South Wales, Victoria, South Australia and Tasmania. Within this market, businesses can choose their electricity retailer and negotiate supply contracts directly, rather than accepting a standing offer rate.
A broker accesses this market by maintaining relationships with authorised retailers, requesting competitive quotes using the business's meter data and load profile, and comparing responses to identify the most suitable offer for that site's usage pattern.
Which businesses can use a commercial electricity broker?
Any business that purchases electricity through the retail market can use a broker. The approach and available contract structures differ depending on how much electricity the business uses each year.
Under the National Energy Retail Law, businesses consuming less than 160 megawatt hours (MWh) per year are considered small customers in NSW, VIC and SA. In QLD and the ACT, the threshold is 100 MWh per year. Businesses above these thresholds are classified as large customers and can access a broader range of commercial contract structures, including demand tariffs and pass-through pricing.
A megawatt hour is a unit of electricity equal to 1,000 kilowatt hours (kWh). A business using around 100 to 160 MWh per year is roughly equivalent to a mid-sized retail shop or small office running standard equipment year-round.
Is a commercial electricity broker right for your business?
What electricity tariff types does a broker work with?
Commercial electricity contracts include several cost components. A broker reviews all of these when comparing offers, not just the headline rate.
- A flat rate is a single charge per kilowatt hour (kWh) regardless of when the electricity is used. A kilowatt hour is a unit of energy equal to running a 1,000 watt appliance for one hour.
- A time-of-use tariff charges different rates depending on the time of day. Rates during peak periods, typically weekday afternoons and early evenings, are higher than rates during shoulder or off-peak periods.
- A demand tariff charges based on the highest short-interval power draw recorded during the billing period, measured in kilowatts (kW) or kilovolt-amperes (kVA). This is separate from total energy use and can be a significant cost driver for businesses with equipment that starts or cycles unpredictably.
- Network tariffs are set by the distribution company that owns the poles and wires in your area, such as Ausgrid in Sydney or Energex in south-east Queensland. Retailers pass these charges through to businesses, either embedded in the unit rate or listed separately depending on the contract structure.
How is a commercial electricity broker paid?
Most commercial electricity brokers in Australia are paid by the electricity retailer through a margin embedded in the unit rate quoted to the business. This means the business does not receive a separate invoice from the broker. The cost of the broker's service is included in the contract rate over the term.
Some brokers operate on a fee-for-service basis, where the business pays the broker directly and the broker seeks the lowest available retail rate without an embedded margin. The right model depends on the broker and the size and complexity of the contract.
A reputable broker will disclose how they are paid and, where applicable, what margin is included in the rate. This is worth confirming before signing.
Frequently asked questions
Does a commercial electricity broker charge businesses a fee?
Most commercial electricity brokers are paid through a margin embedded in your quoted retail rate — meaning there's no upfront fee or separate broker invoice. However, fee structures vary across the market. Some brokers charge a direct fee for complex or large-volume contracts, while others apply a Value Added Service (VAS) charge, which may appear as a separate line item on your electricity bill or be factored into your contract terms. However the broker is compensated, their payment model should be disclosed upfront and confirmed in writing before any contract is signed.
What information does a broker need to compare electricity quotes?
At a minimum, a broker needs your NMI (National Meter Identifier), which appears on your electricity bill, and a recent bill showing your usage and current tariff. Access to interval meter data, which records consumption in 30-minute blocks, allows retailers to price your contract based on your actual load pattern rather than an annual estimate, and usually results in more accurate quotes.
Are commercial electricity brokers regulated in Australia?
Commercial electricity brokers are not required to hold a retailer authorisation from the AER unless they are also engaging in the retail sale of electricity. Some states have disclosure obligations that apply to brokers. It is reasonable to ask any broker what regulatory obligations apply to them in your state before engaging their services.
How is a commercial electricity broker different from an electricity retailer?
An electricity retailer holds a retailer authorisation from the AER, purchases electricity from the wholesale market and on-sells it to customers. A commercial electricity broker does not hold retailer authorisation and does not sell electricity. They represent the business's interests when approaching multiple authorised retailers, comparing and negotiating supply contracts on the business's behalf.
Can a commercial electricity broker help with demand charges?
Yes. Reviewing demand charge exposure is a standard part of commercial electricity procurement. A broker can check whether your current tariff's demand structure suits your usage pattern, compare retailer offers on a total cost basis including demand components, and identify whether a different tariff class or demand window could reduce costs. Demand is often the component with the most variation between otherwise similar retail offers.
Compare business electricity rates with Zembl
If your electricity contract is approaching expiry, or you have not reviewed your rate in the past 12 to 24 months, a broker comparison is a straightforward way to check whether your current rate is still competitive.
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