Switch in time saves schools bundle
www.nyjournalnews.com By RANDI WEINER THE JOURNAL NEWS
(Original publication: January 31, 2003) Rockland's public schools are expected to save an estimated $67,000 in fuel costs this month through a program that allowed districts to switch from natural gas to oil heating when petroleum prices plunged late last month.
Despite below-normal temperatures and the instability of the energy market, seven of the county's eight districts have been able to cut costs through a buying consortium they started nearly a decade ago to help control fluctuations in their budgets. The consortium locks in fuel prices in warm weather to protect members against the market-driven prices now expected to jolt home and business customers.
The consortium has been so successful that Orange County asked to join this year, said Marlene Riccobono, assistant superintendent for business for the Rockland Board of Cooperative Educational Services. BOCES coordinates natural-gas purchases.
"As a group, we put a tremendous amount of effort in this, and it's nice to see it pay off," she said. "If we can control the costs on noninstruction items and keep them as low as possible, it's more money for instruction."
For years, the public school districts have joined together to lock in both fuel-oil and natural gas prices to give them the option to shift from one system to the other to save money and to have a backup in case of emergencies. Generally, the districts heat their buildings with natural gas where possible because gas has consistently cost less than fuel oil in recent years.
But this year has been different. Temperatures are running colder than average, and the international oil market has been shaken by a strike in Venezuela that has cut off supplies from that country and by concerns about a war against Iraq, which may further constrict the amount of oil for export.
Michael Donovan, a spokesman for Orange and Rockland Utilities, which supplies natural gas to the districts through local dealers, said that "any time there are problems in the (Persian) Gulf — or in Venezuela — it affects the price of oil."
"If anything affects the supply source, it pushes prices up. There's a lot of anxiety, and that may be having an effect on price," Donovan said. "But the other (factor) is the weather — and if the weather is especially cold, that raises the demand. The more the demand, the greater the price."
Which makes local administrators even more pleased to belong to the consortium: Natural-gas prices were locked in last year, and fuel oil prices were locked in June, school administrators said.
Budgeting for heat at the more than 80 buildings owned by the county's eight public school districts and the Board of Cooperative Educational Services is not an exact science. It begins in March, when most school boards start figuring out their finances for the next school year.
Based on past fuel usage, weather predictions and ideas from consultants, district administrators try to estimate what's needed to keep thousands of children and staff members comfortable during cold weather.
"We have a consultant out of Pennsylvania whose predictions are based on the way the market runs and (who) came up with their best guesstimate," said Ed Dolan, director of facilities for South Orangetown schools. "They thought it was going to be a cold winter. I budgeted extra in oil, especially — like 50 percent more."
In order to make predicting fuel costs more reliable, Rockland's public schools belong to two fuel consortiums. One, through the state Office of General Services, allows the districts to purchase heating oil at a reduced rate. The other, through Rockland BOCES and O&R, does the same for natural gas.
O&R also can request that local schools switch from natural gas to oil in case home-heating requests skyrocket, although that hasn't happened this year, Donovan said.
Although the districts use the consortiums to control prices, each district budgets and pays for its own consumption costs. The contracts with suppliers often include a range of prices to allow for price fluctuations, with a cap on costs that is generally negotiated yearly.
Pearl River school district officials decided to purchase energy independently this year because they got a better deal on energy costs in the summer, although they had been part of the consortium for years.
"This year, we negotiated our rate back in June with Hess," said Sandra Cokeley-Pedersen, district spokeswoman. "We pay a lower rate — $4.15 per decatherm, and the current rate is $5.60 per decatherm. Then there's a $10,000 fee to participate in the consortium, and it just wouldn't have been cost-effective for us."
The dual-heating option has been particularly advantageous for the schools recently, since below-normal temperatures during the winter have followed the record-breaking warm winter of 2001-02.
"Between August and the end of November, our (natural) gas usage had risen 35 to 40 percent due to colder weather," said Clarkstown Schools Superintendent William Heebink. "However, we had been part of a countywide bid in October 2001 which locked in gas prices for us, so the actual per-unit gas cost had decreased 15 percent from 2001-02."
Peter Wichrowski, a meteorologist with the National Weather Service, said winter 2001-02 was the warmest on record, with an average temperature of 41.5 degrees, compared with the normal 34.7 degrees. Winter, he said, is December, January and February for National Weather Service calculations.
Since Dec. 1, temperatures have been slightly below normal, he said. December was 1.3 degrees below normal, and so far, January has been 2 degrees below normal. He said projections for February are for normal temperatures — the average for February is 34.6 degrees — but added that predictions of even a week in advance are only guesses.
Most Rockland districts voluntarily switched to heating oil for January after oil prices plummeted, administrators said. There have been exceptions, of course. Not all schools have the dual heating option, and not all buildings would save money by doing so because of age, size or oil tank capacity.
Dolan said his district's high and middle schools made the switch, while the three elementary schools remained heated by natural gas. If the low temperatures continue, he said, the district may be asked by O&R to switch to oil anyway.
"We're also bracing ourselves for O&R to hit us. I've got a feeling it's going to be a cold February," he said.
Most of the public schools already had budgeted more for heating costs this year because of predictions for both weather and fuel expenses, administrators said.
"We didn't decrease our budget simply because we had two mild winters," said East Ramapo Schools Superintendent Jason Friedman. "We don't like to see ourselves fluctuate on that. We would rather have a consistent funding level. We have protections in terms of cooperative bidding through BOCES for oil and gas. We feel we'll be fine."
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