Surety Bonds for Energy Brokers
Deregulating the Energy Industry
Some states (like New Jersey and Pennsylvania) deregulate electricity and/or natural gas consumption. This allows consumers to choose their own energy providers. Other states (like Minnesota and Utah) are regulated, meaning consumers don’t have an option. The government selects their energy provider and rates for them.
In deregulated states, consumers can hire energy consultants or brokers to connect them with affordable energy providers.
What is an energy broker?
Energy brokers and consultants act as intermediaries between consumers and energy providers. Consumers can hire brokers to help them find the best deals available in their area. Brokers can negotiate with energy providers to score better rates for their customers.
Energy brokers don’t sell or distribute energy directly to consumers. Instead, they devise a plan to help their customers save money by negotiating deals with energy providers.
Get Your Energy Broker Bond:
Quick Takeaways
- Some states deregulate electricity and natural gas consumption, allowing consumers to choose their energy providers.
- Energy brokers and consultants act as intermediaries between consumers and energy providers.
- Deregulated states often require energy brokers to post surety bonds as part of the licensing process.
- Required bond amounts may fall between $5,000 and $10,000.
What is an energy broker bond?
Deregulated states often require energy brokers to post surety bonds as part of the licensing process. Energy broker bonds protect the public by ensuring brokers and consultants comply with state laws and regulations. To avoid claims against their bonds, energy brokers must abide by their contractual obligations.
If you wish to operate your business in more than one state, you may need a separate license (and surety bond) for each location.
How do energy broker bonds work?
Energy broker bonds are three-party agreements between a surety, an obligee, and a principal.
- Principal: The energy broker
- Obligee: The state requiring the bond
- Surety: The bond underwriter
Each state that requires this bond may have specific conditions for energy brokers. Make sure you review and understand your state’s requirements. If you want to operate in multiple states, you must obtain a separate license and bond for each one.
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If you don’t meet the terms of your bond contract, someone may file a claim against your bond for damages. If the claim is valid, your surety may cover the costs involved – up to the total bond amount. Then you will need to repay them.
How much do surety bonds for energy brokers cost?
This will largely depend on the bond amount required in your state. Typically, energy brokers may pay between 1-5% of the total bond amount as their premium. If you have an excellent credit score, you could pay a lower rate than those with poor credit.
Here are some of the states that may require this bond. Bond amounts usually fall between $5,000 and $10,000.
- Illinois
- Maryland
- Pennsylvania
- New Jersey
- Ohio
Get an Energy Broker Bond in Your State
We can help you find the right surety bond for your energy broker or consultant business. ZipBonds offers the fastest and most secure option for acquiring license and permit bonds. Our all-digital platform is intuitive and straightforward. Apply online or call us at 888-435-4191 to speak with an agent directly.
About ZipBonds.com
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.