Democrat and Chronicle from Rochester, New York on December 16, 1984 · Page 104
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Democrat and Chronicle from Rochester, New York · Page 104

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Rochester, New York
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Sunday, December 16, 1984
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Page 104
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nnnr THE PROPER LUGGAGE The kind of luggage a business person uses depends on the type and length of travel, says columnist John Molloy on 9F. SUNDAY (. DECEMBER 16. 1964 ROCHESTER ' NEW YORK SECTION F 2F NYSE 3F CREDIT CHART 4F AMEX 5F OTC 8F MUTUALS 10F CLASSIFIED Democrat and (ThronifU) OOVJL r u ii u J rvj ANALYSIS Prime interest rate not easy to determine By Skip Wollenberg Associated Press v Banks seldom' explain why they do it when they do it, and they are reluctant to say how they do it. But raising and lowering the prime rate is one of the most widely publicized things they do. Setting a prime lending rate isn't as simple as it used to be, bankers and banking analysts say. The main reason is that banks have been forced over the past decade to compete more vigorously than ever before for depositors and borrowers. Deregulation of the interest rates that banks can pay on consumer deposits has made it more expensive for banks to attract funds. And when lending those funds, banks are finding they are no longer the primary source of money for some big borrowers. "It's a very different environment," said Gerald Fischer, a professor of business administration at Temple University in Philadelphia. "There are a lot of other players in the markets." James Wooden, who follows the banking business for the investment firm of Merrill Lynch, Pierce, Fenner & Smith, added, "A lot has happened to commercial lending in the past few years, and it has been mostly negative for big banks." But not all bank watchers are sympathetic. Robert K. Heady, publisher of the Bank Rate Monitor, a Miami-based newsletter that regularly surveys the interest rates banks are offering consumers, said rates that banks are paying for funds are falling faster than those they are charging for loans. "The banks are not passing on the lower costs of renting their customers' money," he said. The banks themselves seldom provide any explanation for changes in their , prime rates, and are reticent about dis-' cussing publicly how they do it. "It is the rate we feel is appropriate," . one banker said in explaining a recent rate adjustment Even at that, he spoke only on condition he not be identified. The American Bankers Association describes the prime rate as a benchmark "used to compute an appropriate rate of interest for a particular loan contract." The rate that a customer must pay for a loan from a bank may be above or below the prime rate. Among the things banks consider in setting the prime, the association said, are its cost of funds, its administrative costs and competition from other credit suppliers. In setting a rate for a particular loan, the banks must consider the creditworthiness of the borrower, the nature of collateral the borrower may be prepared to put up for the loan, the length and size of the loan itself and the bank's overall relation with the borrower. Decisions on the prime rate are one of the most widely publicized things a bank does, and at most banks, the decisions are . made at the highest levels. The prime rate has inched down over the past 2'2 months from the year's peak of 13 percent, which was in effect from late June through late September. It has fallen in increments of one-quarter or one-half percentage point to the present 1 1.25 percent at most of the major money center banks. The latest adjustments occurred in late - November, a few days after the Federal Reserve Board reduced its discount rate to 8.5 percent from 9 percent But analysts and bankers say there is little correlation between banks' prime rates and the discount rate, the interest the Fed charges on loans to member banks and other financial institutions. The Fed changed the discount rate not at all in 1983 and only twice this year, while banks shifted the prime rate 12 times. Banks generally borrow sparingly from the central bank, treating it as a last resort when looking for funds. The Fed encourages that view nni7 fDHES INDUSTRIAL Daily Weekly 1200 1190 1180 1170 1160 1150 1140 1130 .1120 1110 .1100 1090 1340 1300 fill 1260 - - 1220 i 1180 .1140 1 100 1060 1020 980 940 I 900 M T W T F OJF MAM By John P. Campbell Democrat and Chronicle Business A! mid the pinstriped lawyers and bureaucrats at the New York Public ia v oervice iommision 8 nui Hearing ui Rochester, you won't miss a bushy-bearded man in overalls who looks like he just climbed out of a boiler room. The unmistakable figure is David E. Thurston, graying and gritty at 55. Even if Thurston has switched his trademark overalls for a suit, hell probably keep comfort- . able by wearing suspenders under his vest. A Fingernail or two may be blackened from a dropped lug wrench. While not fond of hearings, Thurston will force himself to sit still for the sake of the downtown Rochester steam heat system. Rochester Gas and Electric Corp. plans to abandon the system next October, saying a spiral of problems has made it uneconomical to continue. Higher oil and natural gas costs have been spread among fewer and fewer customers as more landlords drop the system to install their own boilers. RG&E first started selling steam, a byproduct of its electric generating plants, in 1889. Only about 100 customers still use the system, down from 143 last year and 401 in 1974. " Abandonment is a deep shame in the eyes of Thurston, a stationary engineer, who believes in fixing old, useful machines before installing the latest high-tech black boxes. Armed with an engineer's common sense , and an ex-Catholic's redirected fervor, Thurston has been chipping away at some formidable bureaucracies. IN 1978, THURSTON took on RG&E alone to challenge an overbilling to the Powers Building, where he had repaired the heating system to make it more efficient. After camping out in the building for two weeks to collect meter readings, Thurston squared off against RG&E's powerful lawyers and won. For about five years! Thurston has nagged state regulatory officials to make plans for RG&E's eventual abandonment of the steam heat system. Thurston's persistence also prompted downtown business people and landlords to consider their energy use and the conse-' quences of losing the steam heat district. Joseph Reisdorf, who as a project manager for the Rochester Engineering Society started studying the steam system in 1979, recalled that at first, RG&E would not release its list of steam customers. "Since David had contracts with many of the downtown buildings on steam, he assembled a list," said Reisdorf, now with a New Jersey state commission to establish 1 high-technology research centers, i "Early on, some people wanted to keep him at arm's length,", Reisdorf added. "I mean, he looks pretty informal, to say the least, when he goes to see some vice president at Xerox. But he really got them to think collectively about the problem and take some action." . "David managed to bring everyone togeth er," said Armand A. Lartigue, manager of facilities administration for Xerox Corp. and president of a cooperative of downtown building owners that has asked the PSC for permission to take over the steam system. Given the non-profit status of the cooperative Rochester District Heating Cooperative, Lartigue said, it could offer users a lower . stflxn rst-c THURSTON HIMSELF, with the backing of a Houston energy company, Time Energy Systems Inc., also has applied to take over the system. But Thurston and the RDH cooperative say they are not adversaries. In fact, Thurston and Time Energy Cornell wants world's most powerful computer By Phil Ebersole Democrat and Chronicle Business Cornell University is seeking money from government and industry to buy a computer more powerful than any now in existence. Such a supercomputer could help make Cornell the focus of a new high-technology region, resembling California's Silicon Valley, but extending across upstate New York, according to Kenneth G. Wilson, a Cornell professor who won the 1982 Nobel Prize in physics, in a talk in Rochester last week. He said Cornell is now negotiating with computer companies to design a new supercomputer 1,000 times more powerful than the Cray-1 supercomputer and two to 10 times more powerful than supercomputers now on the drawing boards. "We intend Cornell to get a head start . . . on the 1990s computing environment," he told members of the Rochester Venture Capital Club. He said the money to pay for this would come partly from the National Science Foundation and other government agencies and partly from large corporations, especially those in upstate New York. From 1968 until recently, Wilson said, the National Science Foundation provided little ' money for computing in scientific research. Computer firms didn't give their most advanced computers to universities, he said, and scientists and engineers found it difficult to budget supercomputers, which can AVERAGE J JASOND MTWT I wan j Close I 1 ! Dec. 14 ' f "J" 1175 91 . V- Qfl A. I 1 " v BO : : i 84L ' 82 i ; J 80 ? , : 7sl u Meet David E. Thurston: engineer, idealist, advocate for a steam heating system he doesn't want to see go up in smoke mm cl: i ? University is looking for money to buy supermachine that could be the center of a Silicon Valley in upstate New York and link upstate research institutions ii iiniiMMiriM IIE17 YORK STOCK EXCHANGE Weekly i 1 . . Close I, 100 1 ' rw iA II 96 92 88 84 80 -76 72 68 64 60 56 F D J F MAMJ J A Rad Hoffmann Democrat and Chronicle y- rf tMA r - democrat and Chronicle IIIDEX HEW YORK STOCK EXCHANGE VOLUME Daily 240 220 200 180 160 140 120 100 80 60 40 20 650 600 550 500 450 400 350 300 250 200 150 100 S O N D MTWT f earlier suggested to the users that they form a cooperative. So, even if the PSC chooses the cooperative (a decision is expected late next year), Thurston and Time Energy could stay in the picture, possibly under contract to install or operate a system reconfigured with new boilers and upgraded steam pipes. There's only a slim chance Thurston could make a profit from owning or operat-1 ing a steam system. If that happens, he said with a shrug, fine. But most people familiar with the steam system's recent history acknowledge Thurston isn't motivated by money. Asked why he bothers to attend countless PSC hearings and slog through mounds of arcane utility statistics, Thurston replied waggishly, "I really don't know. Maybe it relieves a potential gastritis condition." When he talks about the steam system, though, his conviction and heat rise to the surface. "STEAM SYSTEMS ARE a real asset to any community," Thurston said. "They're used all over Europe, and they work now in 29 American cities. The one here was RG&E's pride because it reduced coal emis- sions the city used to be a cloud of coal smoke. Then the EPA was invented and the lawyers took over. "I don't want to run it all. I just want it salvaged." That's the voice of an operating engineer, someone licensed to operate an engine and related equipment such as pipes and traps. Casey Jones on his runaway train was an operating engineer. So is a crane driver. (Thurston once ran a steam-powered crane). Stationary engineers, who operate machines fixed in place, worship precise measurements, not intriguing theories. "A stationary engineer has to make work what the design engineer says should work," said Theodore L. Flood, director of state and local government relations for Time Energy, and Thurston's colleague on the steam system project. What Thurston makes work are energy systems, by blending traditional boiler repair with a computer analysis of how energy can be reduced to heat and cool a building. "If you have an old boiler, we have an old boiler person," says the brochure of Thurston Operating Co. Inc., which Thurston runs out of a brick former factory at 215 Treriiont St. and at his farmhouse near Sodus Center in Wavne Countv. ON A RECENT MORNING, Thurston showed a visitor around the 200-acre farm, mostly consisting of woods and untitled fields. The spread contains an 18th-century lime kiln, various animals, an ample vegetable garden and a sawmill that Thurston and his family used to build a barn. In the warm and worn kitchen, Thurston's wife, Anne, 52, offered coffee brewed "oh a hefty cast iron Elmira woodstove. Across the hall, daughter Elizabeth Thurston, 25, typed energy data from a building in downtown Rochester into a desktop computer. Three of her eight brothers and sisters also work for their father. "I didn't think I'd end up working for my dad, because I had to learn about boilers and firing rates, and does a girl do that?" Elizabeth Thurston said. "But I love it I believe in my dad. He's brilliant." Brilliant perhaps, but by his own admission not attentive enough to the bottom line. Thurston Operating pulls in less than $300,000 in annual revenue. Thurston wouldn't disclose his income, but said it was enough last year to buy a car and additional land for the farm. TURN TO PAGE 10F cost $5 million to $15 million each. Now, however, the National Science Foundation has been given $40 million a year to support supercomputer centers. Cornell is one of 22 applicants for three grants the National Science Foundation will award in April. In addition, Wilson said, Cornell is looking for support from large corporations such as Eastman Kodak Co. In return for their contributions, these companies would get first look at the results of research from the center. International Business Machines Corp., which doesn't manufacture supercomputers, has worked closely with Cornell, Wilson said, but few other companies have made any commitment to it to date. Startup costs of the Theory Center would be $10 million to $100 million for equipment and $1 million to $10 million for staff. By 1987, the annual budget would lie $18 million, including $4 million to $6 million in grants from federal agencies for the basic program and $12 million for specific research projects from corporations and government. New knowledge discovered at the Theory Center could be used, among other things, in computer simulations in movies, in analyzing data in exploring for oil, in aircraft design and in design of very large scale integrated circuits. TURN TO PAGE 10F Weekly In Millions Activity Dec. 10-14 416 000 A S O N D

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