>> Next on "Need to Know" a program that will help you make
choices.
Do you want to know about the energy choice before the deadline
is up?
Stay with us for the basics you need and we will talk about how
the city schools are looking at downsizing buildings.
DOUG: it sounds easy.
Voice your choice.
But it is not.
[Captioning Made Possible by the U.S. Department of Education]
(For "Need to Know")
>> Thanks for being with us.
I'm Michael Caputo.
There's less than a week left to make a choice on your gas
choice.
Rochester electric has done their best to make people aware.
"Need to Know'" Julie Philipp gives you one more look at making
the choice.
>> This slogan is all over.
On buses, billboards and advertised in newspapers.
It sounds easy.
Voice your choice.
But it is not.
>> It was certainly simpler in the old days if you will.
>> The old days for most Rochester gas and electric residential
customers ended in October when mail carriers brought this
voice your choice enrollment kit to every RG&E customer.
For generations we didn't have to give much thought to the
utility powering our homes and businesses.
To understand how times are changing I asked RG&E's voice your
choice spokeswoman YVONNE SELTIG to give us the basics.
First the power is generated at the plant and that is
electricity in the form of electrons that flows along certain
paths whether overhead lines or underground pipes to
substations then to meter boxes on customers' homes and light
the lights, keep the house warm.
These are responsible for generating the electricity,
transporting the electricity and measuring the electricity that
our customers use.
>> But state officials are changing that.
In a few years all RG&E will do is move the electricity through
its system of wires, pipes and substations.
Private companies are starting to take over all the generating
plants and others are competing with RG&E to buy that power and
resell it to consumers.
These resellers are energy service companies.
Dr. Mark zupan dean of the Simon school of business say the
changes will lead to competitive electricity options for
consumers.
For instance, an ESCO may offer cheaper rates at night to run
appliances.
>> We have seen this in phone service where consumers can
respond to the differential prices and get an itemized bill and
different caming plans that allow them to exercise greater
choice figuring out when to place calls.
>> But he says it takes a long time to turn a monopoly into a
free market.
>> It will take decades before, my prediction, before we move
closer to an economist's ideal of a competitive market.
>> But the public service commission is stepping up efforts
toward a free market by trying something new in Rochester.
Until now utilities across the state had been allowed to use a
stable fixed rate option as a default and by and large people
are stuck with it.
But anyone who doesn't pond to RG&E's voice your choice
automatically goes on a variable rate plan for a whole year.
>> We are the first to have a variable price option as a
default.
we understand that the public service commission is interested
in having customers experience the market, understand the
volatility and, you know, to kind of understand what
competition is all about and see the benefits, frankly.
But the benefits may come over a period of time.
>> 10 years?
And it could be a long time?
>> It could be a long time.
>> So in a way we are guinea pigs in terms of experience being
the volatility?
>> Yes.
>> She says electricity prices have doubled on the wholesale
market over the last five years and could climb steadily
meaning the rate could be different in the coming months and
RG&E could be fielding calls from angry consumers who didn't
voice their choice.
>> There's a concern.
That is why RG&E has been so aggressive in communicating this
program and trying to call people to action.
The variable price option as our default was the consequence of
the may rate agreement.
And while it wouldn't have been RG&E's first choice, that is --
it was an outcome of the agreement and it very important that
customers understand that this variable rate may impact them in
that way.
Again, that is very much an impetus for the advertising that we
are doing so that merchants know what is going on.
-- so that customers know what going on.
>> Even those that know the importance of making a choice by
December 31 have their work cut out.
First they call the ESCOS.
Two of the ones listed it no rate plans available when I
called.
Of the four remaining companies I took the best rate and used
my November RG&E electric bill to fill out a worksheet on the
voice your choice website.
It took time, a calculator and a few phone calls to customer
service.
No matter what company I choose to buy my electricity from I
have to pay RG&E about $33 to deliver the power to my home
including taxes.
If I don't voice a choice my total electric bill with supply
added would be about $59.
But that's a variable rate plan and there's no limit on how
much it could go up or down next year.
If I pick the best fixed rate option which turned out to be
coned solutions on the day I called RG&E's competitors my total
monthly bill would be $58 through 2005.
Energetix had the best variable rate.
The total would be $54 but the operator there warned me that
could go up as much as $30 in January or February given current
predictions about the price of electricity.
And remember, the offered rate even the fixed rate option can
change daily the.
So your result would be different than mine.
Once you have determined what's best, sign up.
You can change your mind any time until December 30.
After that, sit back and relax until you have to do it again.
>> It goes until 2008 so until then we know this will be an
annual program.
>> I'm joined by Jerry norlander of the not for profit public
utility law program.
Your organization has been following this restructuring or
attempt at deregulation in New York state and elsewhere for
some time now.
Correct?
>> Yes.
We were involved in the discussions at the public service
commission in the mid 1990's, then they entered into
restructuring deals with each utility in 1997, 1998.
>> So you have seen this going on in other communities prior to
Rochester?
>> Yes, we have.
There was one territory that did it we were looking at it and
filing comments as to how that ought to be done.
Also other utilities have retail access programs that are
running all the time.
This is unusual in that it condenses the time to choose at a
particular season and requires a choice by customers by fixed
date.
>> So, the Rochester voice your choice is little different than
the others you have seen to date?
>> Exactly.
For example in New York City customers can choose any time and
switch providers.
There's no open period or closed period.
You are not stuck with the choice for a period of time unless
you may have signed a contract to stay with a new provider.
You can always come back to the utility and get the regulated
rate.
>> How come it different here?
>> Well, I think what we are seeing is a push by the public
service commission to encourage customers not to get their
electricity service from the old utility.
And the way to do that has been essentially to raise the price
for stable service, create a variable price option and
customers who don't choose will be put on the variable option,
which expose them to volatility.
>> In other markets we have not been put on the racial market?
>> No that runs counter to all recommendations of national
consumer groups that have looked at the issue.
The consensus is that customers who don't do anything in a
situation like this should continue to get electric rates that
are stable and predictable and calculated pretty much as they
always used to be.
>> But they have been doing that in these other markets and
almost no one is leaving the utility.
There's been a really low response rate across states,
correct?
>> That raises a God question.
What is the goal?
Is the goal that we have competition so that people can have an
option that provides at least as good or better service at a
better price?
Or is the option just to put people out into the marketplace?
And I think that people are not seeing the savings that would
normally entice them to shift.
The retail provider markets have gonethrough several bad years
and some of the companies that got into it in the beginning got
out or haven't been actively competing.
>> What you are saying is that it is not a good alternative but
there isn't a better alternative, having a default fixed rate,
not really helping promote this free market deregulation but
going to the variable is not the right answer to that?
>> I think for customers on two things, people who have trouble
meeting their budget at the end of the month the variable rate
poses real problems.
In the New York City area they do have a variable rate that Con
Edison does have that moves up and down sometimes three and
four cent a kilowatt hour without notice and even in the
summertime.
So merchants who may be upset by a change in their bills by $20
to $30 and who are having trouble making end meet, that may not
be the optimum for them.
>> I talked to the dean of the some time mop school at the
university of Rochester and he says it is true this isn't
really a free market but it will take years.
When the iron curtain went down it took 10 years for reform to
happen and in order to get that going something has to shake
these people from -- shake us -- from our reliance from that
stable utility.
>> I think the thing that would shake them would be a better
deal.
If the competitors can offer as good or better service at a
better price.
But that's not what has been going on.
In the last four years -- four years ago we had 24 states that
had opened up.
Eight of them went back to regulated.
And there has been a consensus generally that the attraction of
retail access was oversold.
And if you think about it, people were getting service through
the old utilities at the cost of service, what it cost to
produce it through their own power plants.
RG&E has some pretty inexpensive power, the second lowest in
the state.
It was hard for anybody to compete with that.
Now those power plants are sold, RG&E has to go out into a
larger market space and buy.
And that market space has wholesale prices that are dependent
upon the price of natural gas.
So, natural gas is going up so we are seeing higher prices in
that marketplace.
Someone who now owns the old plants, why would they sell it
cheap to retail customers when they can get it sold wholesale
for higher prices.
>> What's a better way to get the competition going that would
lead to the -- that won't lead to the $20 to $30 a month
increase?
>> That poses an interesting question.
What is the policy here?
The legislature opened it up but they didn't say that they
should stop serving customers.
It unclear whether the new companies have obligations to
serve.
Some things they do, some they do.
In Pennsylvania, Enron, I.B.M. and AOL put together a big
company to serve residential customers and ended up turning
them back to the old utility.
They went bankrupt.
So the question is, what is the social policy that we ought to
have when we do open up part of the utility service to
competition.
And I think that the obligation of the utility needs to off
safe and adequate service.
>> Maybe a lower phase-in until more factors are determined,
until the market perhaps is less volatile?
>> Yes, I think that the wholesale markets are extremely
unpredict be believe and volatile and it is not clear whether
some of the problems in the wholesale markets have been cured
by the federal energy regulatory rules and there's been a lot
of litigation about that after the California debacle.
So it is difficult for a retail provider to go out and line up
energy price for two years or three years or four years in
advance and know what it going to cost.
They don't know what the cost of gas is and --
>> But sometimes deregulation in the electric industry may give
us the like the phone calling plan where I do a lot of
long-distance calling and this provider has the best rate.
Is that something that can occur if we phase it in more
carefully?
It certainly can and I think that is one of the hopes that
alternative pricing method will come out.
But bear in mind that most of the innovation, many of the
innovations are being done by the old utilities.
They are the ones that are contracting for wind power and solar
power and renewable, offering time of day rates.
>> So give them little more time to to it.
But the bottom line the ball is already rolling, Rochester has
to make a choice by the end of the year, what is your best
advice at this point?
>> I think anyone who is on a limited income or has a tight
budget should be wary of the variable rate.
It is highly unpredictable as to how high it could go.
Even though it may cost a little more, the downside is no not
there.
>> We want to hear what you have to think about this topic.
Give us your feedback by emailing us at wxxi.org and call us at
258-0250.
>> This is the program where we have look at the Rochester city
schools.
It involves closing cool buildings to cut expense.
It is an issue on the front burner in 2005.
>> Are you going to close schools x or merge y with z.
There are a lot of steps that are to make it happen in a very
short period of time.
>> It sounds a bit like an algebra reason but the C.E.O. of
business services for the Rochester city school district is
cautiously describing something else.
>> What the district is trying to do at this time is marry the
potential of school closures with a long-term facilities
modernization plan.
>> Translation, temporarily shut down some of the city's 55
schools for refurbishing.
Shut down an unspecified number of others permanently.
It such a sensitive subject.
The advisory committee is using the word facility or building
words that stir up less emotion than the word cool.
>> Any time you close schools it will become emotional because
you will have certain folks that say my student is in that
school and he or she is doing well.
>> Can you find some punctuation on this page?
>> Why are you impacting my neighborhood?
It is not an easy task.
>> But fewer and fewer students are attending city schools, a
trend expected to continue.
And most city schools were built more than a half century ago.
So district officials are hoping the advisory committee's
recommendations will mean progress, and soon.
>> I think it will.
Just like this corporate America you bring in third party
consultant who tell you what you already know but when a third
party railed dates it it has to be correct.
>> A number of factors are being considered.
For instance, school 17 is important to the surrounding
neighborhood.
Kids come here to learn, families come to the in-house
community center and dental clinic.
Other than that officials steer away from discussing specific
schools but details are expected in January.
>> It is a very aggressive time line, but we think it important
that we work on it now.
And the key is getting response from the school understanding
that they understand what the school district is doing.
>> So far few people have showed up at public meetings held by
the advisory committee.
He expects that to change when the committee releases the
recommendations.
>> Joining us is Sandra parker the chairman of the Rochester
business alliance and thanks for being with us.
Let's talk first about the criteria that you are using for
renovation of buildings.
Are we talking about age, or the use of space?
What are we using as a criteria?
>> All of the above.
That's one of the purposes of the community advisory meetings
is to gather input from community members and business people,
architects and engineers in terms of what should be the
criteria.
>> Age is not the only?
>> No because it is important to take into consideration the
roll of school in the neighborhood.
What roll does the -- what role does the school play in the
neighborhood from the aspect of everyday living within that
neighborhood outside of the academic requirements.
>> In other words, if there's a community center or gathering
place?
>> Exactly.
>> It may mean something more and may mitigate the need for
closing?
>> Yes.
>> Are we going to see closings?
>> The other aspect is what is the fate in terms of what are
some of the technology improvements we need to make as we look
down the road.
What are some of the things that have to be done.
>> To add to that they are looking at enrollment trends.
We moved to a new choice system where the school district is
divided into three zones.
So, demand is an important factor we have to look at as well.
So there is everything from potential reuse of the building,
impact of an action on a particular school in that
neighborhood, facilities, financial considerations, what are
some of the capital requirements we would need to keep a
building open, etc.
So it is really a much more thorough process than we went
through a year ago and involves community players from across
the district: I feel good about what they have been doing.
>> Do you think there will be closings in
>> It inevitable.
You can't lose three or four thousand students at the
elementary and not lose some.
But the question is how many and when does it occur.
We want to be smart about that.
The recommendations will come from this school and community
advisory committee.
It will come to the facility modernization board.
We want to make sure we don't make mistakes like investing in
upgrading technology in one school and close it two or three
years later.
>> I think that is the thing I've been impressed with, the
process and inputs where we're getting input from parents.
We are getting input from a wide variety of constituent
groups.
>> I will be the concept particular for a moment though.
Once you say school x is closing that becomes an emotional
thing for the parents, for the community.
You try to school -- you tried to close school 36 and the
community sort of rose up against that.
Clearly that made a change in that decision to close it.
How are you going to overcome the emotion of this school will
close?
>> Actually, it wasn't so much the community uprising at 36
that led to pulling back.
I think pulling back on that recommendation was the right thing
to do.
We didn't do our homework as well as we could have.
Looking at the make-up of that particular student population,
future potential for that building.
I felt we could have done a much better job, which is why we
revisitted the process.
And my belief is, you are right, once we identify a particular
school or schools, whatever they may be, there's going to be an
outcry, people will come and folks who have been going to that
school, generation after generation, will be out.
That is why the second time around I wanted to look at can we
close a facility but not necessarily disrupt and break up an
buyer school.
There could be an opportunity that if we do have to take a
school offline that we will have enough spaces that we may be
able to move whole classes or different grade levels together
and that way colonel date some of our -- consolidate some of
your schools.
>> Mike, I think the other thing that has changed this time and
again it the process, you have more, a more diverse group
involved in the decision.
It won't be a decision solely by the school district.
>> What will it include?
>> When the decision is made, our commitment is to be part of
the vehicle to let the community know why we think it is the
right thing.
>> People in Syracuse have been doing this a while.
Why not Rochester?
>> It is interesting.
Syracuse had advance recommendations for school closure that
were rejected by the board.
Buffalo did it and had been rejected.
They went back it a longer process to involve the community and
last year they were Abe to move forward with closings.
So, we are sort of going through something similar.
We wanted to be mart about it.
We wanted to look at what the other districts that have gone
through this and how they processed it in their community and
gotten more input and that's what we are doing now.
>> I think the other thing that important to note that the
Rochester city school district has done, in my opinion, a
better job in erms it of keeping the facilities up to date.
And their annual facilities improvement plan has been superior
to what we have seen in the Buffalo and Syracuse markets.
So we haven't seen necessarily a deterioration of the
facilities that are in existence in the Rochester schools.
>> I may get this wrong but the city a year or two ago denied
the district the ability to go beyond its borrowing limit and
that was to renovate at the time Franklin, I believe.
Will the district ask for ability to go beyond that borrowing
limit this time?
>> Well, part of what we are going too far to look at is is how
are we going to finance it.
That is one option.
One option is not to exceed state law the limit of 9% but to
look at repairses that we could make internally within the city
to allow us to have a level of debt service that would allow us
to make the kind of Rehn nation --
>> 9% is the city and school district.
I think they divided it somehow.
Don't you need the city to say yes to this?
>> That's why it was so important that we stood up for the
process where both the mayor and I are co-chairing this
facility modernization board and there is staff from the city
involved and working with us as well as community players.
Because we are talking about a major community initiative.
Not just the district initiatity.
We are looking at upgrading our schools for our community, not
just physically but looking to put this place better programs
and practices so we can have state of the art schools that are
producing great results.
>> I just have a few second left.
.
You have the last word.
>> Key is the fact that the mayor is the co-chair of the group
and we have city representation.
So when you talk about salesmen of the final plan herself to be
part of the sales team.
>> I want to thank you both for talking about this.
Thanks for tunching in this week to our encore program.
We will see you next week and happy holidays.