Firms’ Use of Energy Fees Catching Heat
By the time she saw the note at Toni & Guy hair salon in Mission Viejo--which casually advised her that a $2 energy surcharge would be added to her $55 haircut--Virginia Stout was already under her stylist’s control: wet-headed with dead ends in need of some quality scissor time.
“I should have just walked out,” said Stout, a 36-year-old schoolteacher, with a huff. “I kept thinking, ‘Is it really going to cost them $2 to use the hair dryer here?’ But they had me right where they wanted me. Boy, was I hot.”
Months into an energy crunch that has seen power blackouts and dramatic utility hikes, consumers are being dinged with surcharges across the board, from 76 cents more for a car wash to another buck for the exterminator to spray their homes for ants.
A practice that started early this year in the travel industry with surcharges at hotels and sites such as the San Diego Zoo has since spread to countless businesses, becoming an unavoidable extra expense for consumers. The more they get hit, the more they grumble--reminiscent of the days when the widely unpopular ATM surcharge started to become ubiquitous.
The trend is building even as the energy crisis has diminished somewhat lately and gasoline and utility prices have leveled off. Sparklett’s recently added a $1.75 fee for water delivery, FedEx tacked on a 4% fuel charge to every outbound shipment, and dry cleaning chains throughout Southern California have added energy fees that range from 3% to 5% of a customer’s total bill. Even soda machine vendors are adding 10 cents a can.
“This is on the verge of getting out of control,” said Wendy Wendlandt, associate director of the California Public Interest Research Group, a consumer advocacy group. She noted that a price hike for the peaches she buys at a farmer’s market in Los Angeles is being blamed on energy costs.
“How can companies justify such arbitrary fees?” Wendlandt asked. “Does it really cost my dry cleaner 5% more to press my shirts? Does it actually cost $1.75 more to have a jug of water delivered to my house? It makes you feel like [companies] are using an unfortunate energy crisis to make more money, and it’s starting to get old.”
Though it’s not illegal for businesses to impose energy surcharges, some consumers are refusing to cough up the extra dough. Several have filed lawsuits against California hotels accused of deceptive practices in connection with the fees.
Companies say the charges are temporary--and necessary--to cover rising electricity and gasoline prices. Heavy energy users such as dry cleaners, fitness centers and route-based delivery services were among the first to follow hotels by implementing extra charges.
But some suspect the practice is simply being copied by companies that see others doing it. Managers are quick to tell customers how common surcharges are, and there is little consistency in how businesses are disclosing the fees--if at all.
At the Irvine Hand Car Wash, Doug Ferraro recently squinted at his receipt and noticed he had paid 76 cents extra for an energy fee. The Tustin man said it was the first time he had seen such a charge, even though he gets his Dodge pickup washed there twice a month.
“How long has this been going on?” said Ferraro, suspiciously eyeing the workers who busily dried his truck. “I don’t like this one bit.”
Manager Rubin Sanchez said the fee was imposed two months ago, and that signs were posted throughout the building. Most either became wet or have fallen down, and he said he hasn’t thought to replace them.
“We’re not hiding anything,” Sanchez said. “It’s expensive to use our equipment and utilities keep going up. If they go down, we’ll think about dropping [the fee].”
Katherine Green of Mission Viejo said she finally had enough of the “surcharge bandwagon” when she received a bill for her Terminix bug service and saw a $1 fuel charge added for each residential visit. The bill came a few days after Green, also a Toni & Guy customer at the Shops at Mission Viejo, had to pay two surcharges at the salon--for a total of $4--because she got both a haircut and color.
Stylists at the salon and officials at Toni & Guy, a Dallas-based national chain with six stores in Southern California, refused to comment on the surcharge.
Such forced fees have clearly begun to anger consumers such as Green, who dealt with the unexpected expense by reducing her hairdresser’s tip.
“As for [Terminix], I didn’t pay it,” Green said. “I flat-out refuse.”
So have many other customers since the exterminating company began imposing the surcharge nationally five months ago, said spokesman Steve Good. Terminix, which has about 75,000 residential clients in Southern California, uses 1 million gallons of gasoline a month, he said.
“After 18 months of precipitous increases in gas prices, we felt we had to do something,” Good said. “But we haven’t lost customers over it. If they don’t pay it, we don’t push it. And we hope that with gas prices coming down, we’ll be able to eliminate it altogether soon.”
But Dan Jacobson, legislative advocate for CalPIRG, said the concern is that such charges won’t be dropped once the energy crisis is over or even as utility bills level out.
“Customers forget, and that’s the danger here,” he said. “The consumers are the ones getting a double-whammy. They’re paying for it now, and they’ll be paying for it later, probably even when they shouldn’t have to.”
So common are the fees now that companies choosing not to impose them are turning it into an advertising ploy, just as some banks did during the ATM surcharge tiff.
This week, employees at Bruegger’s Bagels in Irvine put up a sign touting their “no surcharge” policy, saying customers had started to ask about any extra fees prior to placing an order.
“This works,” said Tim Sanders of Yorba Linda, as he grabbed a bagel and coffee there Wednesday. “It beats the surcharge here, surcharge there thing, that’s for sure. Almost makes me feel like I’m getting something for free.”
*
MORE INSIDE
Rebate debate: FERC says it will negotiate a settlement over Davis’ $8.9-billion claim. A17
