Companies are very sensitive to gas and power expenses –these services are necessary but weigh heavily on their budget. Faced to the great technicality of the energy market, which is even more aggravated by its recent liberalisation, increasingly more companies have been relying on intermediation services to optimise their energy supply contracts. Others, on the other hand, do not look to intermediaries because of their high and opaque costs. Therefore, they choose to face this challenge on their own, at the cost of these activities becoming time-consuming or of adopting simple but expensive solutions, for example by buying fixed price energy services.
Who are energy supply intermediaries? What is their added value? Why is it more advantageous to sign and manage a contract directly with the supplier? How to do that at the best conditions?
I. Consultants and brokers? Who are they and what do they do?
What do energy supply intermediation companies offer?
Intermediation companies offer the following to their clients. They:
- Set up and open a deal request on behalf of their clients
- Compare deals received from suppliers
- Manage paperwork with distributors
- Propose solutions to optimise prices
- Check bills received
These companies also offer their services to suppliers. They:
- Help increase their volume of business
- Support them in understanding the clients’ needs.
- What’s the difference between brokers and consultants?
What’s the difference between brokers and consultants?
There are two types of intermediaries that bring clients and suppliers together: consultants and brokers.
Consultants manage their clients’ contracts on their behalf. They are renowned for their expertise in the energy market.
Brokers connect suppliers and consumers aiming to reach a transaction. They are renowned for their sales skills.
To justify their work, both brokers and consultants add even more complexity to a market which is complex per se. However, having the right tools and information to understand technical terms and the issues that the market may imply, managing gas & power contracts is within everybody’s reach.
II. Why is it more advantageous to sign a contract directly with the supplier?
Intermediation always implies costs for the final client.
The intermediation company stands between two opposite interests: on one hand, the final client wishes to pay as little as possible for the best possible service; on the other, the supplier aims to maximise their profit margin. To prevent this, you need to know which side to stand on!
Intermediation always implies costs for the final client.
Let’s take the example of an intermediation company which offers its services to its clients as free because it charges the supplier. Actually, the supplier will include a mark-up in the deal price offered to the client.
The way the intermediary charges its services is not transparent.
Intermediation companies’ compensation models depend on the market conditions:
- For one client, if the matter fare decreases below the price it had when the contract was signed, there will be a profit share.
- For another, if the matter fare increases above the price it had when the contract was signed, then the compensation will be lump sum-based.
For example, let’s take a consultancy service for a 2-year contract, 10,000 Mwh consumed per year and a fare of 4 €/Mwh: if the profit is shared into two parts, the compensation due for the intermediation company will be 40,000 €, whereas, if the market increases, the lump sum will be around 5,000 €… and this would be for the same identical service!
This is why, if you have chosen to go to intermediation services, we suggest you pick one whose prices are transparent and independent from the profit you will earn or the losses you will suffer.
Quick price comparison has a cost.
Intermediation companies disclose prices which can be compared real time. This comparison cannot but have high prices.
Real «live» prices hide high costs which are related to the development of complex and expensive IT systems. These add to the final clients’ bills.
«Live» prices that are updated regularly, over several weeks, represent a great risk for the supplier, which will add the cost of this risk to the final bill too. The risk is caused by the volatility of the matter market, whose evolution can never be exactly predicted. The supplier, therefore, is particularly careful to how long it takes from the deal to be presented until it is accepted. The longer it takes, the higher the prices proposed.
For this reason, moving from a classic deal to one with the least possible duration over time is the best choice for the end user.
III. How to sign a contract directly with the supplier and at the most convenient conditions?
Make the most of the two cost items in the bill you can take advantage of.
Consumption volumes being equal, you can control two items which will allow you to reduce significantly your final bill: the supplier’s profit margin and, more importantly, the moment when you sign the contract.
Place suppliers in competition with each other.
Just like brokers, YEM allows you to put energy suppliers in competition with each other in order to reduce prices.
Unlike brokers, though, YEM does not inflate prices. As a matter of fact, YEM has actually adopted the only way to measure low prices against each other, i.e. by requesting a fixed-term offer, and does not charge the supplier.
Moreover, the supply contract is not signed on the platform, which benefits the clients in two ways. When the offer is requested and if the clients wishes so, he/she will be able to negotiate the price and the contract general terms. How? By directly calling the suppliers which have presented the best deals on YEM.
Be one step ahead when signing the contract.
Buy your gas or power service at a variable price and adopt strategies to reduce costs. In few clicks, on YEM you can spread the risk by fixing the price in different moments when the matter fare is lower.
Choose a transparent service
Preferably choose a consultancy service whose prices do not depend on the profit you will gain.
Do not forget that the supplier charges every single cost they will pay, including intermediation costs. Choose a service that puts you in a position of advantage.
Choose a service that puts you in a position of advantage.
Just like consultants, YEM makes its energy supply expertise available to its clients. However, YEM’s approach is different. Its goal is to lead its clients to become expert, informed and autonomous buyers of gas & power services and managers of their supply contracts.
On one hand YEM simplifies the process to have a positive impact on the energy prices; on the other, it creates a professional network through which businesses can get into contact with suppliers and compare bespoke deals for their energy needs. YEM makes the energy market approachable thanks to professional tools and services.
Not only is YEM a facilitator, it also provides the key to understand the market of energy supply contracts and operates as an advisor. It provides explanation of technical terms and gives instructions on where to find information rapidly. It also reports any possible issue and offers suggestions on the possible solutions with the necessary tools to take free and clear decisions.