Australian energy brokers are paid by the retailer that wins your contract, not by you. The commission is built into the unit rate you pay, commonly one to three cents per kilowatt-hour, and it is usually paid for the life of the contract. It does not appear on your bill as a line item, because it is not a line item. It is inside the rate.
That is the whole mechanism. What follows is what it costs, how to check whether you are paying one, and what the alternatives look like.
Why you cannot see it on your bill
A commission is not a fee charged to you. It is a payment from the retailer to the broker, funded by the rate the retailer quotes you. The retailer builds it in, quotes you the loaded rate, and pays the broker out of the margin.
So there is nothing to find on the bill. The bill shows the rate you agreed to. It does not show what that rate would have been without the commission inside it, and the broker has no obligation to tell you.
What it costs over a contract
Work it out on your own usage rather than on a percentage, because the commission is charged per kilowatt-hour and has nothing to do with the size of your bill in dollars.
Take a site using 200,000 kWh a year on a three-year contract. At 2 c/kWh, which sits in the middle of the usual range:
- 200,000 kWh x $0.02 = $4,000 a year
- Over three years, $12,000
Swap in your own annual usage, which is on your bill, and multiply by $0.01 to $0.03 to get the range. The number surprises most people because it scales with consumption, not with how good the deal looked at signing.
How to check whether your rate includes a commission
Four questions, in order. The first two are for whoever arranged your contract, the second two for your retailer.
- Ask who pays you. Not how they are paid, who pays them. If any part of the answer is the retailer, the rate you were given includes a commission.
- Ask for it in cents per kilowatt-hour. A broker who will not put a number on it is telling you something. A percentage answer is not the same question, because an uplift on the rate and a commission per kWh behave differently as your usage changes.
- Ask the retailer for the net rate. Retailers can quote a rate with no broker attached. The gap between that and your rate is what the arrangement costs you.
- Ask what happens at renewal. Commission is usually paid for the life of the contract, so a longer term is worth more to the broker than to you. That is worth knowing before you agree to five years.
The three ways energy advisers get paid
Everyone in this market is paid one of three ways, and the way they are paid decides whose side they are on.
- Retailer commission. Cents per kilowatt-hour from the winning retailer, inside your rate. The adviser is paid more when you use more and when the rate is higher. Most of the market.
- Rate uplift. A margin added to the wholesale or retail rate, sometimes described as a percentage. Same conflict as a commission, expressed differently.
- A share of what you save. The adviser is paid only out of the difference between what you paid before and what you pay now. Nothing to pay if nothing is saved.
The first two mean the person advising you is paid by the company you are negotiating against. That is not a character flaw in any particular broker, it is the structure. Termina works the third way. We refuse retailer commissions, so the only money we make is a share of what we save you. $0 cost unless we save you money.
Common questions
How do energy brokers get paid in Australia?
By commission from the retailer that wins the contract, built into the unit rate the customer pays. It is commonly one to three cents per kilowatt-hour and is usually paid for the life of the contract. The customer does not receive a separate invoice, because the cost sits inside the rate.
Who actually pays the broker fee?
You do, indirectly. The retailer pays the broker and recovers it through the rate it quotes you. Money that reaches the broker came off your bill first.
How much do energy broker commissions cost a business?
Multiply your annual kWh by $0.01 to $0.03. A site on 200,000 kWh a year is looking at $2,000 to $6,000 a year, and three times that over a standard three-year contract.
Can I ask my broker what they are paid?
Yes, and the answer is informative either way. Ask for it in cents per kilowatt-hour rather than as a percentage or a description.
Is a commission-free adviser actually free?
No, and anyone saying so is not being straight with you. It means nobody is paid by the retailer. Termina is paid from a share of what we save you, so there is a cost, it just only exists when there is a saving to take it from.
Are energy brokers required to disclose their commission in Australia?
There is no general obligation on brokers in the commercial energy market to disclose commission to a business customer unprompted. Ask directly, and ask for the figure rather than an assurance.
Does a longer contract cost me more in commission?
Usually, yes. Commission is typically paid across the life of the contract, so term length is worth more to whoever arranged it than it is to you. Weigh a longer term on the rate it locks, not on the reassurance it offers.
