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Posted at 11:50 p.m. PDT Friday, April 27, 2001

You'll be paying energy costs twice

SOME BUSINESSES RAISING PRICES TO OFFSET SOARING BILLS BY MICHAEL BAZELEY Mercury News

Think your energy bills have been sky-high lately?

Get ready to pay twice.

Business owners are getting slammed by soaring energy costs, meaning consumers will have to pay more for a hot meal, a good haircut or a nice massage.

Hotels and restaurants were among the first to pass on the costs of higher utility bills. Now hair salons, athletic clubs and other energy-hogging businesses are reluctantly raising their fees or adding surcharges to their customers' bills.

Even San Jose State University is considering charging students a surcharge to help pay its energy bill, expected to be $3 million more than budgeted this year.

``This is the kind of money you just can't pull out of a budget with no repercussions,'' university President Robert Caret said. ``We're looking at a couple of really bad years.''

Soaring natural gas prices are the big culprit for most businesses.

The Almaden Valley Athletic Club's monthly natural gas bill shot up from $3,000 to $16,000 in just two months.

Conservation efforts have brought the monthly tab down to $10,000. But the club still had to raise monthly dues about 10 percent across the board, general partner Joe Shank said.

``We put the pool cover on the outdoor pool, anything we can do to conserve,'' Shank said. ``And we'll just try to continue with the same customer service we've given for 25 years.''

Athletic clubs and other health-related businesses are especially vulnerable because of their reliance on natural gas appliances such as water heaters, saunas and heated pools.

The Almaden Valley club, for example, operates two pools, three Jacuzzis, steam rooms and saunas. Additionally, the club's restaurant uses gas-fired ovens.

Piedmont Springs spa in north Oakland has raised prices twice since August to help cover the operating costs of its five hot tubs, two saunas and a washer and dryer. In eight months, massages and facials have gone from $50 to $60. And the price of hot tub rentals has jumped 20 percent, to $12 an hour.

``We're really trying to hold the line,'' said Sulinda Pettigrew, one of the owners. ``But it's hard. Our costs went up 42 percent in one month. It's really scary.''

Getting a big gas bill

Employees at Fitness 101, which has health clubs in Menlo Park and San Jose, know they are going to get hit with a big gas bill. They just don't know when. Because of a billing error, they haven't received a gas bill from Pacific Gas & Electric Co. in four months.

In the meantime, managers have been nervously watching their electricity bills creep up 15 to 20 percent. Ironically, it's not the treadmills or Jacuzzis that are burning through all those pricey kilowatts. It's the air conditioners needed to cool those sweaty bodies.

``We generate heat,'' said Gordon Bliss, the company's vice president for operations. ``People don't like to exercise in 85-degree rooms.''

So far, the two gyms have not had to raise their monthly dues.

But state regulators approved an electricity rate increase in March, and it's likely to start hitting bills in June. Businesses could see their electricity bills shoot up 30 percent or more.

What's worse, the rate increase will take effect during the summer, when energy-hogging air conditioners are running at full power.

``That has fear in me,'' Bliss said.

For restaurant owners, the situation is especially ominous. While energy costs are shooting up, the economy is cooling down, making it risky for restaurants to raise prices. Although there has been talk of restaurants adding an energy surcharge to bills, only a few have done so, said Greg Ochinero, president of the Silicon Valley chapter of the California Restaurant Association.

``I expect surcharges will be a tough sell,'' Ochinero said.

Adding to the financial woes of restaurants, he said, is the skyrocketing cost of worker's compensation insurance and an increase in inspection fees being charged by Santa Clara County health officials.

``It's going to be a tough ride,'' he said. ``You have this confluence of expense factors that are coming together at the same time.''

Menu prices increased

As much as he didn't want to, Massimo's Restaurant owner Bill Rinetti raised menu prices recently. Rinetti has tried to shield customers at his Fremont eatery, tacking on 10 cents here, 5 cents there, he said.

``We've raised prices by pennies,'' he said. ``What we're trying to do is beat this through conservation.''

Still, he acknowledged, it's hard to conserve enough to cover energy bills that have tripled in the past few months. Add to that the fact that the minimum wage went up in January, and Rinetti said prices have nowhere to go but up.

``Everybody's had to raise prices,'' he said.

At first glance, San Jose State would appear to be immune from the state's energy woes. Its co-generation plant produces most of the school's electricity.

But the power plant runs on natural gas, and gas prices have fluctuated wildly in recent months. Next year's energy tab could be $5 million to $6 million higher than the university expected, Caret said.

He said the university is focusing on how it can reduce energy use.

University spokeswoman Sylvia Hutchinson said reports that the university will levy a new $55-per-semester fee are inaccurate. While a student energy fee is an option, she said, the university would like to avoid it.

``First and foremost, we are looking to the state budget for help,'' she said. ``But this is a very serious problem. We need to protect our academic quality.''

Mercury News staff writer Becky Bartindale contributed to this report.

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-- Martin Thompson (mthom1927@aol.com), April 28, 2001

Answers

I predict there will be a shortage of UHaul and Budget trucks in CA.

-- Guy Daley (guydaley@altavista.com), April 28, 2001.