Letter of Authority (LOA) Explained: What You're Signing and Why It's Safe

Somewhere between "get me a quote" and a signed energy contract sits a short document that makes a lot of business owners hesitate: the Letter of Authority, or LOA. A broker asks you to sign it before they can shop the market, and because it uses the word "authority," it can feel like you are handing over control of your utility account. In almost every case, you are not. A standard LOA does one narrow thing—it lets a broker request your usage data and pricing on your behalf. It does not switch your supplier, and it does not sign a contract for you.

This guide explains exactly what an energy letter of authority permits, the important difference between an LOA and a Letter of Exclusivity (LOE), the two levels of authority you might be asked to grant, how long an LOA lasts, and the specific clauses to check before you sign. The goal is simple: to let you move forward with a broker confidently, knowing precisely what you agreed to.

Jaken Energy, an affiliate of Jaken Finance Group, uses plain, non-exclusive LOAs and explains every line before a client signs. If a broker ever refuses to clarify what their LOA allows, that alone is a reason to pause.

What a Letter of Authority Actually Does

An LOA is a document you sign that authorizes an energy broker to act in a defined, limited way on your behalf. At its core, it does two things:

• Grants access to your usage history. With your signed LOA, the broker can request your historical interval and billing data from your local utility. That data—your load profile—is what suppliers need to price your contract accurately.
• Permits the broker to solicit quotes. It lets the broker approach licensed retail suppliers and request pricing for your accounts, so you receive real, comparable offers instead of ballpark guesses.

That is the entire job of a standard LOA. It is the key that unlocks accurate pricing. Because a supplier cannot quote a firm rate without seeing how and when you use energy, the LOA exists to get that data legitimately and with your consent. It is a routine, everyday document in energy procurement—used the same way across the more than 15 deregulated U.S. states.

What an LOA Does NOT Do

This is the part that removes the anxiety. A standard Letter of Authority does not:

• Switch your energy supplier. Signing an LOA changes nothing about who supplies your electricity or gas. Only a separate supplier contract—signed by you—can do that.
• Commit you to a rate or contract. An LOA is not a supply agreement. You remain free to review offers, negotiate, choose a different broker, or do nothing at all.
• Give the broker spending power. It does not let anyone move money, change your banking, or alter your account beyond requesting data and quotes.
• Bind you to the broker forever. A non-exclusive LOA lets you work with others, and most have a defined expiration.

In short, a plain LOA carries the authority to gather information, not to make decisions. The decision to switch suppliers always requires your signature on a separate contract—which is why understanding your options first, through resources like our guide on broker vs. consultant vs. buying direct, matters.

LOA vs. LOE: Know the Difference

The single most important distinction to understand is LOA versus LOE, because they are very different commitments that can look similar on paper.

A non-exclusive LOA keeps your leverage intact: multiple brokers can pull your usage and compete for your business. An LOE hands one broker exclusive negotiating rights for a defined period. Exclusivity is not automatically bad—for very large or custom loads, a supplier may only invest in tailored pricing when it knows one broker controls the deal—but you should grant it consciously, for a limited term, and only after the broker has demonstrated they will run a genuine competitive process. If a document you are handed is labeled an "LOA" but contains exclusivity language, treat it as an LOE.

Level 1 vs. Level 2 Authority

Some LOAs distinguish between two levels of authority:

• Level 1 (information only): The broker can access your usage data and contract details and request quotes, but cannot sign anything for you. This is the standard, low-risk arrangement most commercial buyers should expect.
• Level 2 (authority to act): The broker can also take actions on your behalf, potentially including signing a supply agreement. This is a meaningful step up and should never be granted casually.

For most businesses, Level 1 is all that is needed and all you should sign initially. Grant Level 2 authority only when you have a deep, trusted relationship and you deliberately want the broker to execute on your behalf—and even then, define exactly what actions it covers and set an expiration.

How Long Does an LOA Last?

A Letter of Authority usually carries a validity period, commonly around 12 months from the date of signature, though this varies by broker and utility. The expiration protects you: it means the authority naturally lapses rather than lingering indefinitely. Before signing, confirm three things about duration and scope:

1. The expiration date. Know when the authority ends and whether it auto-renews (it generally should not).
2. Which accounts it covers. The LOA should list the specific utility accounts or meters, not grant open-ended access to your entire relationship.
3. How to revoke it. A reputable broker will tell you exactly how to withdraw the authority in writing at any time.

How to Sign an LOA Safely: A Quick Checklist

Run any LOA through these five checks before you sign:

1. Is it exclusive or non-exclusive? Prefer non-exclusive unless you have a specific reason to commit. Watch for buried LOE language.
2. What level of authority is it? Confirm it is Level 1 (data and quotes only) unless you intend otherwise.
3. Does it list an expiration and specific accounts? Both should be present and reasonable.
4. Are there termination or trailing-fee clauses? A pure LOA should not carry penalties. If it references broker fees or termination charges, ask why—see our guide on broker fees.
5. Is the broker transparent about compensation? The LOA is also your moment to confirm, in writing, how the broker is paid before any contract follows.

Reputable brokers welcome every one of these questions. Defensiveness—or pressure to sign quickly without answers—is the real red flag, not the document itself. For consumer protections and licensed supplier lists, your state's public utility commission and the U.S. Department of Energy are useful reference points, and average commercial prices by state are published by the U.S. Energy Information Administration.

Frequently Asked Questions

Is signing an energy Letter of Authority safe?

Yes, a standard non-exclusive LOA is a routine, low-risk document. It only authorizes a broker to pull your usage data and request quotes. It does not switch your supplier, commit you to a rate, or give anyone spending power. The main things to verify are that it is non-exclusive, Level 1, and time-limited.

Does an LOA switch my energy supplier?

No. An LOA never changes who supplies your energy. Switching suppliers requires a separate supply contract that you sign yourself. The LOA simply enables accurate quotes so you can decide whether to switch at all.

What is the difference between an LOA and an LOE?

An LOA (Letter of Authority) is typically non-exclusive—it lets a broker gather data and quotes while you keep your options open. An LOE (Letter of Exclusivity) grants one broker exclusive rights to represent you for a set period. Always check whether exclusivity language is present before signing.

Can I sign LOAs with more than one broker?

With non-exclusive LOAs, yes—multiple brokers can pull your usage and compete for your business, which preserves your leverage. You cannot do this under an exclusive LOE, which limits representation to a single broker.

How do I cancel or revoke an LOA?

You can generally revoke an LOA in writing at any time, and it also expires on its own—often after about 12 months. Ask your broker for the revocation process in writing before you sign, and keep a copy of the signed document.

Should I ever sign a Level 2 LOA?

Only when you deliberately want a trusted broker to act—potentially sign—on your behalf, and you have defined exactly what that covers with an expiration. For most commercial buyers, Level 1 (data and quotes only) is the appropriate and sufficient choice.

Conclusion

The Letter of Authority is one of the most misunderstood documents in commercial energy—and one of the least threatening once you understand it. A standard LOA is a limited, non-exclusive permission to gather your data and request quotes. It changes nothing about your supply until you separately sign a contract you have reviewed. Check that it is non-exclusive, Level 1, time-limited, tied to specific accounts, and free of hidden fees, and you can proceed with total confidence.

At Jaken Energy, we use plain, non-exclusive LOAs, disclose our compensation up front, and walk you through every line. If you are ready to see real pricing—or you have an LOA in hand and want a second opinion—contact our team, start with Get My Rates, or read the next steps in our Knowledge Hub, including choosing your procurement path and renegotiating your contract.

Word count: 1720