How Energy Brokers Get Paid

The basic arrangement

An energy broker is, in the Pennsylvania PUC's words, a firm licensed by the commission that acts as an agent or middle man in the sale and purchase of electricity but never owns the electricity [pa-puc-electric-terms]. Maryland's definition is nearly identical: an entity or individual licensed by the PSC that acts as an agent or go-between and never owns the electricity [md-electric-choice-glossary]. The broker does not sell you power. It brings you a supplier's offer and helps you sign it.

Because the broker does not own the electricity, it cannot mark it up in the usual sense. It gets paid in one of three ways.

Supplier-paid, per kWh. The most common model, and the one this site uses on most contracts. The supplier agrees to pay the broker a fee for each kWh the customer uses during the contract term, and the supplier adds that fee to the price it quotes the customer. The fee is expressed in mils, thousandths of a dollar per kWh. A quote of 7.4 cents per kWh with a 3 mil broker fee means the supplier's own price was 7.1 cents and 0.3 cents is the broker's.

Customer-paid flat fee or retainer. The customer hires the broker as a consultant, pays a fixed fee or an hourly rate, and the broker takes nothing from the supplier. Less common in the small and mid-size commercial market, more common with large industrial buyers and with consultants who handle a whole portfolio.

Hybrid. A smaller supplier-paid fee plus a customer-paid fee for services like bill auditing, demand management, or procurement across several states.

Nothing about the supplier-paid model is secret or improper. What matters is that you know the number, because you are the one paying it.

The math on a cultivation facility

The fee looks small and is not. Every number here is an input we chose.

Assume an indoor cultivator using 4,800,000 kWh a year, on a 24-month supply contract, with a broker fee of 3 mils.

• Annual fee: 4,800,000 × 0.003 = 14,400 dollars.
• Over the term: 28,800 dollars.
• As a share of the supply price: if the supplier's underlying price is 7.1 cents, the fee is 0.3 ÷ 7.4 = about 4 percent of what you pay for supply.
• As a share of the total bill: at Illinois' June 2026 average commercial price of 14.53 cents per kWh, delivery and supply combined [eia-epm-5-6-a], the facility's bill is roughly 697,000 dollars a year and the fee is about 2 percent of it.

Now change one input. At 6 mils, which is inside the range operators tell us they have been quoted, the same contract pays the broker 57,600 dollars over two years. At 1 mil, 9,600 dollars. Same work, same supplier, same signature. The fee is a negotiation, and most customers do not know they are in one.

Three features of the model follow directly from the arithmetic:

1. The broker is paid on volume. A grow that adds two flower rooms mid-contract pays the broker more without any new work.
2. The broker is paid on term. A 36-month contract pays three times a 12-month contract. Longer terms are easier to recommend than to justify.
3. The broker is paid on signing, not on outcome. If the market falls the month after you fix, the broker's fee is unchanged.

None of this means a supplier-paid broker gives bad advice. It means the incentives point in a specific direction and you should know which one.

What states require of brokers

Licensing and disclosure rules vary by state. Here are five that matter to cannabis operators, drawn from the regulators' own materials. Confirm current requirements with the commission; rules change.

Illinois. The Illinois Commerce Commission licenses agents, brokers, and consultants, known as ABCs, under Section 16-115C of the Public Utilities Act and 83 Ill. Adm. Code Part 454; an ABC is any person or entity that attempts to procure on behalf of or sell retail electric service to a customer in the state [icc-abc-page]. Applicants file a license or permit bond with the application, and there is no application fee [icc-abc-faq]. The disclosure rules are the strongest of the five. Under the code of conduct, a licensed ABC must, prior to the customer signing a contract, disclose that it is not employed by the electric utility in the service territory; must disclose the total price per kilowatt-hour and the total anticipated cost, inclusive of all fees or commissions, over the contract period; must disclose, if applicable, that it will be receiving compensation from the supplier; and the required disclosure must be made before the contract is entered into and signed by the customer [icc-part-454-90]. ABCs also file an annual report by March 31 [icc-abc-page].

Pennsylvania. Brokers and marketers are licensed as Electric Generation Suppliers by the PUC under 52 Pa. Code Chapter 54, using the same license as suppliers but with a different financial security requirement: unless the commission orders otherwise, an EGS-Broker licensee must maintain security of 10,000 dollars, versus the greater of 10 percent of four quarters' gross receipts or 250,000 dollars for a supplier that takes title [pa-puc-egs-resources]. The PUC's glossary defines a broker as a firm that acts as an agent in the sale and purchase of electricity but never owns it [pa-puc-electric-terms]. We did not find a Pennsylvania rule requiring brokers to disclose their compensation to commercial customers, and we have not stated one.

Texas. Since 2020, anyone providing brokerage services for compensation must register with the Public Utility Commission of Texas under 16 TAC 25.112; brokerage services means providing advice or procurement services to, or acting on behalf of, a retail electric customer regarding the selection of a retail electric provider [tx-25-112]. A retail electric provider is not permitted to register as a broker and must not knowingly provide bids to an unregistered broker [tx-25-112]. The companion customer-protection rule requires a broker, before initiating, renewing, or materially changing its services, to give the client its registered name, address, registration number, the names of affiliated REPs, and a description of how the broker will be compensated for providing brokerage services and by whom, and it prohibits falsely stating or suggesting that brokerage services are being provided without compensation [tx-25-486]. An agreement authorizing a broker to act as the client's agent must be in writing [tx-25-486].

Connecticut. Connecticut does not license a "broker" as such. The statute defines an electric aggregator as a person or municipality that gathers together electric customers for the purpose of negotiating the purchase of electric generation services from an electric supplier, provided it is not engaged in the purchase or resale of generation services and the customers contract directly with the supplier [ct-gen-stat-16-1]. PURA's licensing regulations contemplate applicants whose proposed operations are a generator and supplier, a broker or marketer and supplier, or an aggregator and supplier, each licensed as an electric supplier under Section 16-245 [ct-pura-licensing-regs]. In practice, a firm that wants to be paid by suppliers in Connecticut operates under a supplier license rather than as an independent aggregator; ask any intermediary in Connecticut which license it holds.

Maryland. COMAR 20.51 defines a broker as an entity or individual that acts as an agent or intermediary in the sale and purchase of electricity but does not take title, and an aggregator as one that acts on behalf of a customer to purchase electricity; an applicant seeking to operate exclusively as a broker or aggregator must submit a 10,000 dollar bond [md-comar-20-51]. The PSC's shopping site carries matching definitions [md-electric-choice-glossary]. As with Pennsylvania, we did not find a Maryland rule requiring compensation disclosure to commercial customers.

The short version: Illinois and Texas make brokers tell you how they are paid; Pennsylvania and Maryland license and bond them but leave the question to you; Connecticut folds them into supplier licensing. In every state, asking is allowed.

The conflicts, stated plainly

Fee size is invisible unless disclosed. Two brokers can bring you the same supplier's offer at 7.4 and 7.7 cents, and the only difference is the fee. Without disclosure you will assume the second broker found a worse deal rather than a bigger commission.

Term and structure are steered. Fixed, long contracts pay more and pay sooner than index or short contracts, so they get recommended more. Fixed vs. index vs. block-and-index explains why a grow might prefer something else.

Supplier panels are limited. A broker gets paid only by suppliers it has an agreement with. If the best price this month is from a supplier the broker does not work with, you will not see it. Ask how many suppliers were asked to bid and which ones.

Renewal is where the money is. A broker paid per kWh has every reason to renew you quietly at the end of the term, sometimes through an evergreen clause. See contract terms, early termination fees, and evergreen clauses.

Advice is free until it is not. Bill audits, demand studies, and rate class reviews cost the broker time and produce no supplier fee. A supplier-paid broker has a reason to skip them, which is why the useful ones are sometimes offered as customer-paid services instead.

We are subject to all of this. This site is run by a broker paid mostly by suppliers. We disclose the fee in writing before signature, show the price with and without it, and quote a flat fee on request. The best defense against our conflicts is the list of questions below.

What to ask any broker, including us

1. Are you licensed or registered in my state, under what name and number? (Illinois, Pennsylvania, Texas, and Maryland all publish searchable lists; the ICC's entity search shows an ABC's filings and status [icc-abc-faq].)
2. How are you paid on this contract, by whom, and how much, in mils per kWh and in dollars over the term?
3. Show me this offer's price with your fee and without it.
4. Which suppliers did you request bids from, and which declined or were not asked?
5. What would you be paid under each of the structures and terms you have shown me?
6. Is there an evergreen or auto-renewal clause, and what are you paid on a renewal?
7. Will you put the fee in the contract or in a signed disclosure? (In Illinois the signed disclosure is required [icc-part-454-90]; in Texas the written description of compensation is required before service [tx-25-486].)
8. What is the utility's default supply rate today, and does this offer beat it after your fee?
9. Do you also get paid for anything else in this deal: demand response enrollment, a REC purchase, an efficiency vendor referral?

A broker who answers all nine without flinching is worth the fee. One who answers "it's paid by the supplier, it doesn't cost you anything" has answered the first question incorrectly; you can decide how to weigh the rest. The comparison of using a broker at all versus going direct is on energy broker vs. direct supplier, and the FAQ on whether brokers charge cannabis businesses extra addresses the industry-specific version of the question.