Democrat and Chronicle from Rochester, New York on February 8, 1981 · Page 91
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Democrat and Chronicle from Rochester, New York · Page 91

Rochester, New York
Issue Date:
Sunday, February 8, 1981
Page 91
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STEAM SUNDAY DEMOCRAT AND CHRONICLE, ROCHESTER, N.Y., FEBRUARY 8, 1981 16F From Page IF requires that RG&E's natural gas department charge the posted price of oil in New York State to its steam department for the natural gas it huys for station No. 9, which serves industrial customers on the west side of the city. The result is that RG&E's steam department has to pay as much for natural gas as it would for oil to supply this station. RG&E is appealing the ruling. The company isn't sure if a similar ruling could be applied to stations that serve commercial customers. The outcome of the appeal will affect RG&E's decision to convert oil-fired boilers at downtown station No. li to natural gas-burning units, said Mario Silvestrone, senior vice president in charge of consumer services at RG&E. "If you spend money (converting oil boilers to gas) to come up with a customer benefit and find that the benefit isn't there, it impacts other things you can do." Oil price increases. Shortly after the last boiler was converted from coal to oil and natural gas in the early 1970s, oil prices began to rise. Building owners attest that it isn't rate increases that have boosted their bills but increases in the fuel adjustment clause, which allows RG&E to pass along fluctuations in its fuel prices directly to them. Line loss. The system includes more than 25.6 miles of pipes, commonly called lines, t hat must be kept hot year around to prevent steam from condensing into water, allowing corrosion of the pipes. In some areas loss of heat, is minimal compared to the amount of steam delivered. In other cases, especially for low-volume users on the edge of the system, loss of heat is great compared to steam they buy. Some downtown building owners claim that RG&E would like to see them drop off the system so the system could be cut back to serve primarily large-volume customers. Asked if that were true. Silvestrone said RG&E doesn't want to lose any steam customers "but we could live with a system like that." "Living with" such a trimmed system means the company would receive a better rate of return. The 1980 rate of return lor the steam system was 4.H7 percent. That's compared to 10.32 percent that RG&E requested to receive on its electric and gas systems in its most recent rate case, said RG&E spokesman Richard Peck. According to comments from downtown building owners, more customers would drop off the system if they could afford the investment, or had the space for a boiler. But several added considerations stand in their way, including current high interest rates on commercial loans that would be needed if they didn't have the cash on hand to buy a boiler; the prospect of paying the salary (if a boiler operator required on high horsepower boilers; giving up precious space and reliable heat. Some building owners threaten that as soon as rapidly climbing steam costs meet their cost of conversion, they'll switch. But Newman said that he would delay installing a boiler if the city and RG&E announced a commitment to try to revitalize the steam system and keep steam costs competitive with other fuels. Newman criticized the city for not meeting with downtown building owners and not telling them about city interests in the steam system. Ideas from HUD A draft of the HUD study, expected to be released in final form in the near future, suggests that saving the system depends on cutting fuel costs in the short run and changing the system to attract more customers in the long run. Several investments in equipment changes could help cut fuel costs, it says. The study suggests converting a coal-fired boiler at station No. 3, Beebee station, which generates only electricity, to a cogeneration unit that would produce electricity and steam. Such a modification could cost anywhere from Sii million to $20 million, Kamitz said. RG&E says the price tag for making any of several possible changes to that unit ranges from a high of $20 million to a low of several hundred thousand dollars for a minor modi fication, Silvestrone said. "But the economic benefit is in proportion to the investment," he said. "Our gut feeling is that it's a good unit and it's operating efficiently, why dis- tnrk ;t'" A second short-term recommendation of the HUD report is that boilers be modified to burn refuse-derived fuel created by the Monroe County refuse recycling plant, now in the startup phase of its operation. The plant is expected to produce 1,200 tons of refuse-derived fuel a day and RG&E plans to burn half of that at Russell station, which produces electricity. Burning the other half as fuel for steam boilers would require installation of specially designed boilers, Silvestrone said. That could cost as much as $30 million and take three to five years to do. Kamitz suggested that modification of boilers to burn refuse-derived fuel at one plant would cost from $8 to $10 million. RG&E officials claim they are limited in the investments they can make to keep costs down. Steam revenues were $23.6 million last year, compared to $181 million in revenues for the gas system. The report also recommends saving the system over the long term by adding more customers. Kamitz said it makes no sense to make major equipment investments unless RG&E "decides to go all the way and add customers. There's no halfway on this." But making the investments over the long term could give RG&E a good rate of return on its steam department. It could also provide a competitive source of heat for buildings in the central business district. And it could cut the consumption of large volumes of oil and natural gas as alternate fuels such as refuse-derived fuels are substituted. As a long-term plan for adding customers to the system, the report suggests adding several hot water systems around the downtown steam system. Hot water, which can be used to heat buildings, can be piped farther than steam at less cost. Overall cost of creating what are called hot water islands around the steam district would be $250 million, but could be accomplished in sections costing about $15 million, Karnitz said. Silvestrone said a way of reducing fuel costs has to be found before RG&E would consider such a system. He said he pins little hope on saving the system through the methods outlined in the HUD report. RG&E is currently taking what measures it can afford to keep steam costs low, including making plans to convert more oil-fired boilers to natural gas and fighting the FERC ruling, Silvestrone said. Meanwhile the city has asked a consulting firm to look at the prospect of the city building a boiler to produced electricity for street lighting. The boiler, a cogeneration unit, would also produce steam to heat some city buildings. A lot of ifs are involved, but building a cogeneration unit may be possible, says a preliminary study by' Deloitte, Haskins & Sells, an accounting firm. The steam would be carried through RG&E's system, said Richard Kerbel, special assistant to the city manager for energy and technology- The cogeneration plant would cost about $3 million. But options, including possible sales of electricity and steam to RG&E, could save the city more than $1 million on its electric and steam bills, says that study. The benefit to RG&E's steam system in the short run is that RG&E could use its most efficient units to produce steam and avoid using its more expensive oil-fired units, Kerbel said. This action could help keep down the cost of steam to existing customers and could help keep customers on the steam system in the short run. Another unknown the future price of natural gas could affect the goings and comings of steam customers. If naturaj gas continues to be cheaper than both oil and steam, Karnitz said, downtown building owners will have a lot of incentive to switch to natural gas boilers to save money. But if the price of natural gas is totally deregulated currently only some categories of natural gas are being deregulated - downtown building owners would be reluctant to install their own boilers. But predicting the future of fuel pricing is something Karnitz said he'd rather avoid. Don't send money for rebate offer, BBB warns public , MoqAqq The Solution Store For Business, Educational And Personal Computer Needs ATARI ALL ATARI EDUCATIONAL SOFTWARE TAPES ATARI 820 Printer 810 DISK DRIVE Personal Finance Software Package 32K VERSION 40K VERSION Reg. $29" $44995 $59995 $40 35 NOW M995 39500 $56500 53600 $32oo SUPER SPECIAL REG. $3,400.00 ZENITH Z-89 ALL-IN-ONE COMPUTER WITH AUTOS- CRIBE WORD PROCESSING' NOW '29 9500 LEXICON MODEM REG. $175 SANYO 12" BLACK & WHITE MONITOR REG. $325 now$15000 now'18500 SEE OUR ENTIRE PRODUCT LINE INCLUDING: NORTH STAR, ALTOS, HEWLETT PACKARD, CROMEM-CO DYNABYTE DIABLO, NEC, TEXAS INSTRUMENT, CENTRONICS, OKIDATA AND RELATED ACCESSORIES INCLUDING SOFTWARE AND PERIODICLES MiaoAQQ caupuTer srore 1 707 Monroe Avenue 244-9000 Closed Sun 4 Uon Open Tues S Thars 1000-8 00 HM, fti.Sat 10 00-5 30 By JACKIE FARNAN D&C Stall Writer The Better Business Bureau of Rochester Inc. is advising people to "wait and see" before answering an ad offering a 50-cent per gallon rebate on fuels purchased in 1981 and especially before mailing the $5 requested in the ad. The bureau has received at least 10 inquiries a day since the 3' j -inch by (v .--inch ads for the offer appeared in several weekly newspapers here last wee k, said a bureau spokeswoman. Investigators for the U.S. Postal Service in Birmingham, Ala., and the Alabama state attorney general's office are taking a close look at the outfit making the offer, identified as the Retail Oil Association. The mailing address on the offer is Heflin, Ala. Investigators are having trouble finding out who's running the business, said an Alabama postal inspector working on the case and a spokeswoman for the Alabama attorney general's office. Neither office has found a government agency or trade association offering such a rebate. No civil or criminal charges have been filed in connection with the offer. But both offices suggest that people who read the ad exercise caution in answering it. The ad that ran locally last week in seven newspapers owned by Wolfe Publications Inc. announced a 50-cent per gallon rebate on gasoline, diesel fuel, propane and home heating oil. "Everyone can receive rebate from the Retail Oil Association in accordance with official governing regulations," it said. Readers were told to fill out a coupon and send $5 for postage, processing and instructions to a post office box in Heflin, Ala. Postal investigators have "staked out the post office box," said investigator Bill Long. A man calling himself Robert Spriggs picks up the mail about 40 pieces a day, he said. Spriggs identifies his boss as a man named Don Bra-tick. Long said. But Spriggs hasn't told authorities how to reach Bratick Several months ago, letters and sample ads were sent to newspapers around the country, requesting that the ads be run for 52 weeks. A man named Don Bratick signed the letters, Long said. Long said he sent $5 to the address given in an ad and in several weeks received a reply telling him that he would he receiving an application form. In about two weeks the application form arrived. It was a membership appli-cation to the association, which carried instructions to return it with a membership fee. But no amount was specified, he said. The Alabama attorney general's office has received inquiries from newspapers reporting that they haven't received all of their payments for the ads, said spokeswoman Judy Bass. The Alabama attorney general's office identifies the two men involved in the rebate offer as R.L. Spriggs and Don Braddock, she said. The operation appears to have been in full swing since December. Ms. Bass said. And judging from inquiries from other attorney generals' offices across the country, she guessed that t he ads had run nationwide. The Alabama attorney general's office has received no complaints from people who have lost their $5, Ms. Bass said. That may be because people receive replies and are told to expect delays of six to eight weeks, she said. An employee at Wolfe Publications Inc., who didn't want to be identified, said the ad would not run locally in the future. She would not describe how the ad was received by the paper. The paper is cooperating with the New York state attorney general's office in Rochester in its investigation, she said. Eugene Welch, who heads that office, confirmed that his office is investigating the ad. But most of the work will have to be done in Alabama, he said. The telephone number for the Retail Oil Association in Heflin is unlisted. Calls by a reporter to numbers for the association supplied by the Better Business Bureau in Alabama went unanswered Friday. 'COMPUTERS 1st in Features, Performance, Price! 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