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Businesses brace for higher bills

Posted: Friday, May 09, 2008

Dimming the lights eases the pain of huge electric bill rates, but it won't take them away.

Many Juneau businesses are gritting their teeth and eating their losses. But some business owners say that while it's an agonizing decision, they can't afford not to pass on costs to customers.

Last week, Mayor Bruce Botelho laid out three basic pieces of advice to businesses who would raise prices to cover their bills: Explain to customers why they're paying more. Tell them about it before they get out their wallets. And tell them it's temporary.

"That's just good customer service," said Cathie Roemmich, CEO of the Juneau Chamber of Commerce.

Jill Ramiel, co-owner of the Silverbow restaurant and hotel on Second Street, said she did the math immediately after the news of the electric rate hike, and realized she had to raise prices.

"We cannot absorb it," she said. "We would literally go bankrupt and foreclose on our mortgage."

Ramiel planned to absorb half of the next high bill, and make up a quarter with a temporary 5 percent surcharge on food and a $5 surcharge on hotel rooms.

Standing over a crate of fluorescent lightbulbs in a dark front lobby, Ramiel rattled off her conservation efforts. How she and her husband, Ken Alper, are serving fewer soups to reduce pots on the stove, for example. How they've shut down some freezers and refrigerators. They estimated they've saved about 30 percent on electricity.

With fingers crossed, they'll squeeze through the tough times.

"Most everyone seems understanding," she said.

But not everyone has taken it well. Upon hearing of the early decision to raise prices, resident Linda Snow e-mailed the Silverbow saying she would no longer do business there. She also wrote a letter to the editor of the Empire, published in today's paper.

"I think your surcharge is wrong and mean. Also, if businesses pass on their costs to us - they have no incentive to conserve," she wrote in the e-mail.

The Silverbow is not alone. Electric-bill costs are trickling down around town. For example, the downtown Westmark-owned Baranof Hotel added a $10 electricity-related surcharge. And coin-operated dryers in Spencer Realty properties went up to $2 for a load from $1 or $1.50, according to Larry Spencer.

But some businesses said that they couldn't raise prices even if it meant extreme financial pain.

Breeze Inn owner Al Ahlgren said he worried he'd scare customers away if he raised prices, especially with competitors such as Fred Meyer. That company, with stores throughout the Pacific Northwest, can absorb a local cost spike without raising prices.

Debrah Clements of Martha's Flowers and Weddings also said she wouldn't raise prices, despite the cost crunch being the worst such business crisis Martha's had ever experienced. Out-of-state orders are keeping her afloat while local orders are down. She's ordering special flowers this year and hoping people will still choose plumage for Mother's Day and prom.

When Taku Smokeries accountant and office manager Dan Pardee had an energy consultant inspect the Thane Road business, he learned the bulk of his electricity usage would be tough to conserve. The fish processor on Thane Road has limited ability to shut down its blast freezers. Especially now, as salmon season is gearing up.

The company is in a bind. If it lowers prices to fishermen, they'll go to Hoonah or Yakutat. Nor can it raise prices, Pardee said. The only option is to eat the costs, spread out over the next year if possible.

"We play the world seafood market," he said. "So if all of a sudden our fish costs more, we can't sell it."

• Contact reporter Kate Golden at 523-2276 or kate.golden@juneauempire.com.



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