What Is a Third Party Intermediary (TPI) in Energy and How Are They Regulated?

If you have ever used an energy broker to help procure gas or electricity for your business, you have used a Third Party Intermediary — a TPI. Most business energy customers have dealt with one, many without realising the term exists or understanding how the market is structured. The energy TPI sector has historically been opaque: brokers earning hidden commissions, customers unaware of the basis on which advice was being given, and a regulatory framework that was, for many years, entirely voluntary.

That is changing. Regulation of the TPI sector is tightening, disclosure requirements are becoming mandatory, and the Energy Act 2023 introduced powers to create a formal licensing regime for the first time. This guide explains what a TPI is, how the current regulatory landscape works, what you are entitled to know from your broker, and how to identify the red flags that signal a poor-quality intermediary.

What Is a TPI in the Energy Industry?

A Third Party Intermediary is any business or individual that acts as an intermediary between an energy customer and a licensed energy supplier, without itself being a licensed supplier. The term is a regulatory construct, used by Ofgem (the Office of Gas and Electricity Markets) to describe the wide range of organisations that operate in this space.

TPIs include traditional energy brokers, who approach businesses to procure gas and electricity contracts; energy consultancies, which provide a broader range of strategic advisory services alongside procurement; auto-switching services, which compare and switch tariffs on a customer’s behalf; energy management companies, which may combine monitoring, reporting, and procurement functions; and buying groups or procurement organisations that aggregate the demand of multiple smaller customers to access better pricing.

What they have in common is that they do not hold an Ofgem supply licence — they cannot supply energy to customers directly. Instead, they interact with the licensed supply market on behalf of their clients, or direct their clients to specific suppliers.

Why the Term TPI Exists

The TPI framework emerged from Ofgem’s growing concern about conduct in the non-domestic (business) energy market. Unlike domestic energy consumers, who are protected by the more extensive domestic supply licence conditions, business customers — particularly micro-businesses and SMEs — have historically operated in a market with fewer protections and less transparency.

Ofgem found evidence of significant harm: brokers charging commissions that customers did not know about, customers being placed with suppliers that offered the broker the highest commission rather than the customer the best deal, and contracts that were difficult or impossible to exit. The existence of a formal regulatory category for TPIs was a prerequisite for developing rules that would apply to them — you cannot regulate a sector if you have not defined who is in it.

The Regulatory Landscape: Where Things Stand Now

For many years, TPI regulation was voluntary. Ofgem developed a TPI Code of Practice — a set of standards covering transparency, disclosure, and complaints handling — but adherence was optional, and not all brokers signed up. The Dispute Resolution Ombudsman (formerly the Energy Ombudsman) developed its own TPI accreditation scheme, which requires members to meet specific standards on transparency and complaints processes. Both schemes helped raise standards among participating firms, but the voluntary nature meant that the worst actors could simply opt out.

The Energy Act 2023 changed this fundamentally by giving the government and Ofgem the power to introduce mandatory licensing for TPIs. Under the licensing regime, TPIs will need to be licensed by Ofgem to operate in the non-domestic market. The detailed requirements of the licensing regime are being developed and are expected to come into force in the mid-2020s. Once in force, operating as an energy TPI without a licence will be unlawful.

In the meantime, Ofgem has been increasing its scrutiny of TPI conduct, including consulting on strengthening existing rules. The direction of travel is clearly towards a more tightly regulated market — which is good news for customers who have been disadvantaged by opaque practices.

What TPIs Are Required to Disclose

The current disclosure requirements for TPIs — and what customers are entitled to ask for — have been developed through Ofgem guidance and, for accredited intermediaries, through the DRO code.

Commission disclosure. TPIs must tell customers how they are remunerated. In most cases, a TPI is paid by the supplier in the form of an uplift — a number of pence per kWh added to the unit rate on your contract, which the supplier collects and passes back to the broker. This uplift is your indirect cost: you do not pay it separately, but it is reflected in the rate you are quoted. A TPI must disclose that an uplift exists, and — increasingly — must disclose the actual amount.

Panel composition. A TPI should be clear about which suppliers it works with and whether its panel is genuinely open or limited. If a broker only approaches three suppliers because those are the ones that pay the highest commissions, that is materially different from a broker with a panel of 20+ suppliers selecting the most competitive offer for you.

Conflicts of interest. If a TPI has a financial relationship with a particular supplier that might influence its recommendations, that should be disclosed. This includes situations where a broker earns higher commission from one supplier than another, or where a broker has a preferred panel arrangement.

The Ofgem Maximum Uplift Threshold

You may have seen references to a 3 pence per kWh “cap” on broker commissions. The position is slightly more nuanced than that.

Ofgem has not set a formal statutory cap on TPI uplifts, but 3p/kWh has been widely cited as the threshold above which Ofgem considers uplift arrangements to be potentially unfair to SME customers. The 3p/kWh figure has been referenced in Ofgem consultations and guidance as a benchmark for what constitutes a “reasonable” level of intermediary remuneration in the context of non-domestic procurement. Uplifts significantly above this level are more likely to attract regulatory scrutiny and are harder to justify as representing value for the customer.

For a business consuming 500,000 kWh per year and on a two-year contract, a broker uplift of 3p/kWh represents £15,000 of embedded commission over the contract term. That is not an insignificant sum, which is why transparency about the level of uplift — not just its existence — matters so much.

Dispute Resolution Ombudsman TPI Accreditation

The DRO runs a TPI accreditation scheme that provides an independent quality mark for intermediaries in the non-domestic market. To achieve and maintain accreditation, a TPI must:

• Maintain a formal complaints handling process, with the DRO as the ultimate resolution body for unresolved disputes
• Comply with the DRO’s TPI Code of Practice on transparency, disclosure, and fair dealing
• Be able to demonstrate that customer complaints are handled fairly and in a timely manner

Accreditation does not guarantee that a TPI will always act in a customer’s best interest — that is an ongoing relationship management question. But it does provide recourse: if you have a dispute with an DRO-accredited TPI that cannot be resolved directly, you can escalate to the Ombudsman for a binding decision.

To check whether your broker is accredited, you can search the DRO’s online TPI register, which is publicly accessible at the DRO’s website. Each accredited TPI has a unique reference number, which you can verify on the register.

Red Flags: How to Identify a Poor-Quality Broker

Not all TPIs operate to the same standard. Some practices in the market are genuinely harmful, and knowing what to watch for can save your business significant money and frustration.

A broker who refuses to disclose their commission — or who becomes evasive when asked — is the single clearest red flag. Commission disclosure is increasingly a legal expectation, and any intermediary with nothing to hide should be able to tell you, plainly, how much they earn from your contract.

Be cautious of brokers who present “exclusive” deals — contracts supposedly not available anywhere else. Genuine exclusive supplier arrangements are rare in the non-domestic market. This framing is more often used to prevent customers from shopping around.

Long contracts without break clauses or review points deserve careful scrutiny. Three, four, or five-year fixed contracts are not inherently problematic — there are good strategic reasons to fix for a longer term in the right market conditions — but any contract of that length should include a clearly documented process for early exit or renegotiation if circumstances change materially, or at minimum a mid-term review. A broker who resists any discussion of contract terms beyond the headline rate is not acting in your interest.

Brokers who approach you out of the blue claiming your current supplier has overcharged you, or offering to obtain free savings at no cost, should be treated with scepticism. The “no cost” framing typically means the commission is embedded in the contract terms rather than invoiced separately — which is not inherently wrong, but should be disclosed clearly.

The Difference Between a Broker and a Consultant

In the energy market, the terms “broker” and “consultant” are often used interchangeably, but there is a meaningful distinction in what each primarily does.

An energy broker is focused on procurement — finding and securing energy supply contracts on behalf of clients, typically earning commission (uplift) from the supplier. The service may be transactional: the broker finds you a deal, places the contract, and then has limited ongoing involvement until the next renewal.

An energy consultant provides broader strategic advisory services: energy strategy, consumption analysis, sustainability reporting, compliance support, carbon footprint assessment, and procurement — the latter often as one component of a wider relationship. A consultant may charge a fee for advisory services, in addition to or instead of commission from suppliers.

Many firms do both. What matters for the client is understanding exactly what service they are receiving, how the firm is remunerated for each element of that service, and whether the advice given is genuinely independent of those remuneration arrangements.

Telnergy’s Approach

Telnergy is an Ofgem registered TPI (ADR Ref E3561) and has been trading since 2002. Our fee is agreed upfront and disclosed to clients as standard, before any contract is placed — paid directly or via the supplier.

Our supplier panel includes 21+ UK energy suppliers, which means we are genuinely comparing the market rather than steering clients towards a preferred provider. We follow the work of the Ofgem TPI Working Group closely, as it shapes the mandatory licensing regime that will govern the sector.

Where we differ from a purely transactional broker is in the breadth of support we provide around procurement: consumption analysis, non-commodity bill review, ESOS data preparation, SECR reporting support, and ongoing account management for multi-site clients. We believe that a client who understands their energy position — what they are paying, why, and how it compares to alternatives — makes better decisions and is harder to exploit. Transparency is not just a regulatory obligation for us; it is how we build long-term relationships.

If you want to check the credentials of your current broker, or if you are looking for a second opinion on a renewal quote you have received, we are happy to take a look — without obligation and without pressure.

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Frequently Asked Questions

Is there a legal requirement for my energy broker to tell me how much commission they earn?

Ofgem’s expectation is that TPIs disclose the existence and nature of their remuneration, including uplifts. As the regulatory framework tightens — particularly once mandatory licensing is introduced — the disclosure requirements are expected to become more explicit, requiring disclosure of the actual uplift amount. Even under current rules, a broker who refuses to confirm any aspect of their remuneration should be treated with caution.

Can I ask my supplier directly what uplift my broker is charging?

Yes, and suppliers are increasingly willing to confirm this. You can contact your supplier’s business customer service team and ask them to confirm the total unit rate, the commodity element, and the broker uplift embedded in your contract. Some suppliers will provide this information readily; others are more reticent. If your supplier is not forthcoming, that itself is useful information.

What is the Dispute Resolution Ombudsman and what can it do for me?

The Dispute Resolution Ombudsman is an independent, impartial dispute resolution service approved by Ofgem. For business energy customers, it can investigate and adjudicate on complaints against licensed suppliers and accredited TPIs. If you have a dispute with an accredited TPI that cannot be resolved directly, you can refer it to the Ombudsman for a binding decision. The service is free to complainants.

My broker signed me up to a contract I did not authorise. What can I do?

This is a serious allegation and should be treated as such. First, write formally to the supplier disputing the contract on the grounds that it was not properly authorised. Second, if your broker is accredited with the Dispute Resolution Ombudsman, raise a formal complaint with the broker and, if unresolved, escalate to the Ombudsman. If the broker is not accredited, your options are through the courts or through Ofgem’s consumer complaint process. Keep all documentation, including any communications with the broker, the contract itself, and records of when you first became aware of the issue.

Do TPIs need to be VAT-registered?

TPI commission and fees are subject to standard VAT rules. A TPI providing services in the UK that exceed the VAT registration threshold (£90,000 annual turnover as of 2024) should be VAT-registered and should charge VAT on their fees where applicable. Whether VAT is charged on embedded uplifts depends on the specific contractual arrangements. If you receive a VAT invoice from your broker, check that their VAT registration number is valid on the HMRC website.

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Telnergy is an independent commercial energy consultancy (Ofgem registered TPI, ADR Ref E3561). We’ve helped UK businesses reduce energy costs since 2002. Get in touch to discuss your energy strategy.