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PG&E Bills Set to Rise 40%

RIPPLE EFFECT: Prices on services, goods will rise, economists say Carolyn Said, Chronicle Staff Writer Tuesday, March 27, 2001 2001 San Francisco Chronicle


Higher power rates will affect more than just your PG&E bill. You'll feel the pinch when you pick up a loaf of bread, go out for lunch or take your clothes to the dry cleaner.

Natural gas prices have more than doubled over the past year, and regulators are expected to raise electricity rates 30 percent today and make permanent the recent 10 percent increase. These steep increases in utility bills are bound to ripple through prices for all kinds of goods and services, economists said.

"Everything we produce or consume requires power," said Steve Cochrane, senior economist for Pennsylvania forecasting and consulting firm "You'll see prices rise for almost everything." Cochrane predicts price tags for locally produced goods will rise between 2 percent and 4 percent.

Many merchants said they have no choice other than raising prices or closing their doors.

"What can I do, charge an entry fee?" said Harry Pruyn, owner of Solano Cleaning Center, a coin laundry and dry cleaner in Albany. "I can't just sit here and absorb the costs. I have to pass them on."

With 31 dryers, 33 washers, two water heaters and a 9.5-horsepower steam boiler, his monthly Pacific Gas and Electric Co. bill has almost doubled from a year ago, to just under $6,000.

Due to the double whammy of higher store prices and bigger utility bills, it's likely that consumers will rein in their spending.

"This rate hike works almost like a tax for most households. It's an extra bite out of their income that won't be available for spending," Cochrane said. "I think retailers may see a few tough months as households readjust their budgets."

Cynthia Kroll, a regional economist with the Fisher Center for Real Estate and Urban Economics at the University of California at Berkeley, agreed.

"If you combine declining consumer confidence, concerns about the economy and these rising (utility) prices, it certainly could contribute to slower spending in the Bay Area and California," she said.

IMPACT NOT DEVASTATING Still, the impact won't be devastating.

"Obviously, this will have somewhat of a dampening effect on the state's economy but probably not as much as most people think," said Ted Gibson, chief economist for the California Department of Finance. Even the doubling of natural gas bills just eats away about 1 percent of most households' budgets, he said.

"Those are not economy-stopping kinds of numbers," Gibson said, pointing out that much of the East Coast already pays more for utilities than California, even considering the new rate hike.

"These numbers, while they're high and shocking, are not outside the realm of what a good number of other people in this country pay for electricity and heat," Gibson said. "New York, Boston and so on seem to survive reasonably well even under those high fuel costs in a climate that requires more fuel."

The effect from rising gas prices has already shown up in economic figures. The consumer price index for the Bay Area rose 6.5 percent from February 2000 to February 2001, according to the Bureau of Labor Statistics. That far outpaced the 3.5 percent increase nationally.

Although housing costs remain the largest factor, what the Bureau of Labor Statistics calls "an extraordinary" 133.8 percent increase in utility natural gas costs also contributed to the spike.

CONSERVATION BEST CONTROL Energy conservation remains the primary route for both consumers and businesses to exert some control over their skyrocketing bills.

"We're being more conservative with lights; looking at what we're burning unnecessarily; turning off ovens when not in use," said John Threadgold, bakery director at Semifreddi's of Emeryville, which produces 120,000 loaves of bread a week. But the measures aren't enough to offset a $7,000 monthly increase in the bakery's PG&E bills. So far, Semifreddi's has not passed along the extra costs to customers, he said.

Some businesses can't sidestep their energy use. If you sell lamps, you need to illuminate them.

"We have to cry," said Yuri Bugovlya, manager of the Light House, a lamp store on Geary Boulevard in San Francisco.

Pruyn, the Albany laundry owner, has changed his dryers to give 7.5 minutes per quarter, instead of 10. Next, he may spend $9,000 to buy an extractor -- a kind of centrifuge that will spin out a couple of cups of water from each load of wash, reducing the drying time.

"The only other idea I could come up with was to string a clothesline on top of my roof and advertise solar drying," he said.

-------------------------------------------------------------------------------- Tell Us What You Think -- Can you save 20 percent on your energy usage? Gov. Gray Davis' administration is offering rebates for Californians who save on power starting in June, and if you've got a strategy for conserving, The Chronicle wants to hear it. We'll be writing about the hardest-working energy savers in a future story. To get involved, write to the Energy Desk, San Francisco Chronicle, 901 Mission St., San Francisco, CA 94103; or send e-mail to E-mail Carolyn Said at

-- Martin Thompson (, March 27, 2001

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