Just as oil prices have started to fall, there's another culprit driving up the cost of doing business: rising electric rates.
Businesses around Tampa Bay face hikes of 20 percent or more in their power bills if both Progress Energy and Tampa Electric get the increases they have asked for. That leaves many business owners to choose between paying the bigger bill out of increasing slender profits or raising prices and potentially driving cash-strapped customers away.
"We're in a catch-22," said Chris Sulimay, owner of Salon Salvatore Christian in Tampa. "Sales are going down and energy prices are going up. It's going to have to come out of my paycheck."
His summer electric bills run as high as $800. If Tampa Electric's rate increases are approved by the Public Service Commission, his bill could be more than 27 percent higher by May. He has tinted and shaded the west-facing glass windows, trying to cut air-conditioning costs, but he can't stop the constant hum of the hair dryers. His business is down 20 percent this year. If he raises prices, he worried that he'll lose another 10 percent.
Laura Duda, spokeswoman for Tampa Electric, said the company knows the timing is "incredibly unfortunate," but that the utility has also been hit hard by inflation.
"We are not immune to rising costs, either," Duda said. "We are seeing increased costs for our business across the board, like labor and steel and concrete, things that are essential to providing reliable electric service."
Progress Energy recently won a rate increase to help pay for its $17-billion nuclear project, an increase that will be reflected on bills starting in January. Both Tampa Electric and Progress Energy have also asked for rate increases to pay for fuel. If approved at a commission hearing in early November, those rates will also start in January. Tampa Electric has also requested an increase in its base rates. The commission will decide that case early next year, and it would apply to bills in May.
Rising electric rates will affect customers at every turn. Electric bills at home are slated to soar more than 20 percent. Churches, too, will have to tithe enough to pay the power bill, and schools districts worry that educational programs will suffer as money is diverted to keep the lights on.
"We know that the economy being what it is it's difficult to absorb any kind of price increase," said Suzanne Grant, spokeswoman for Progress Energy. The St. Petersburg utility offers energy audits that help business customers cut electric bills.
While salon customers can arguably survive an unkempt hairdo, rising electric costs might also drive up the price of essentials like food. Progress Energy increases could drive up supermarket electric bills by more than 28 percent starting in January. Supermarkets in Tampa Electric territory could see an increase of more than 18 percent in January and further increases in May.
Sweetbay Supermarkets estimates that its 108 stores, spread throughout 18 Florida counties and several different utilities, could see an average increase in electric bills of as much as 20 percent. It remains unclear whether higher electric bills will mean higher food prices for customers, said Nicole LeBeau, spokeswoman for Sweetbay. The chain is investing in energy-saving measures to help lower electricity use.
Electricity to run refrigerators and cool large stores accounts for about 20 percent of a supermarket's costs, said Rick McAllister, president and chief executive of the Florida Retail Federation, which is lobbying against rate increases.
"If they were to get a 20 percent increase in rates, there's no question they will have to pass that along," McAllister said, arguing that in these times, business owners and customers just can't afford it.
Asjylyn Loder can be reached at firstname.lastname@example.org or (813) 225-3117.
Get ready, businesses
Progress Energy and Tampa Electric plan sharp rate increases to pay for rising fuel costs and other expenses the two utilities are facing. Local businesses will take a big hit, and may have to raise prices as a result. This chart shows how much the utilities plan to raise rates starting in January.
|Progress Energy||Tampa Electric|
|Small business, such as a salon||22 percent||15 percent*|
|Midsize commercial customer, such as an office||25 percent||Not applicable|
|Large commercial customer, such as a supermarket||28 percent||19 percent*|
|Industrial customer||32 percent||25 percent*|