Harvard Agrees to New Heat Contract

Negotiators for Harvard and the Cambridge Steam Co. yesterday broke a three-year deadlock and agreed to a contract that will substantially raise the University's heating costs over its three-year duration.

Although the settlement calls for a 20-to 30-percent increase in Harvard's payments for heating, the University's chief negotiator termed the outcome a victory for Harvard because the administration had expected even higher increases.

The agreement, reached late yesterday afternoon in the first negotiation session since November, will make the increase retroactive to July 1, 1982, when Harvard's previous 20-year contract with Cambridge Steam expired.

"When all is said and done, we came out better than we thought," said Robert Saltonstall, associate vice president for operations and Harvard's chief negotiator.

Cambridge Steam officials could not be reached for comment last night.

The company's Blackstone Plant on Western Ave, supplies heat to the River Houses, most of the Yard, and the Business School Harvard consumes 98 percent of the steam produced by the plant, which was converted two years ago to that use exclusively.

Reasonable Returns

The long negotiating process has involved unusual tension because the previous contract, which was negotiated in 1962, became extremely favorable to Harvard after the fuel price increases of the early 1970s.

"We've had a very hard time understanding each other," Saltonstall said yesterday Adminsitrative Vice President Robert H Scott said he was glad to have settled the negotiations and confirmed that the new pact will give Cambridge Steam "a more reasonable return on their investment" in supplying Harvard.

The contract--which will probably be signed formally after review by lawyers next week--calls for Harvard to pay a lump sum of $2.6 million per year and to cover the plant's fuel costs, which fluctuate in the neighborhood of $5 million annually.

The expired pact had the same structure but included a payment of only $800.000 a year.

Unexpected Resolution

According to Saltonstall, the settlement came when Cambridge Steam officials unexpectedly lowered their demands for the lump sum payments by several hundred thousand dollars, and Harvard quickly agreed to the terms.

"We really turned the corner today, some what to everyone's surprise, "he said. "We are relieved to have a settlement."

Along with the financial agreement, the settlement includes plans for a joint Harvard-Cambridge Steam study to develop a more efficient long-run strategy for heating the University's buildings.

Saltonstall cited remodelling the Blackstone plant, using Cambridge Steam's Kendall Square plant, or changing to an alternate source of energy as alternatives to the present arrangements.

"Harvard will be working with Cambridge Steam to find a more attractive way of heating the University. We wanted to force ourselves to do the long-term planning that is long overdue," Saltonstall explained, saying he expected the joint commission to make recommendations in about a year.

Despite the relatively favorable settlement for Harvard, students can expect the rise of nearly $2 million a year in fuel costs to translate into higher room charges. University officials have repeatedly cited the Cambridge Steam negotiations as a major impetus behind this year's tuition increases.

"The bill for steam went up this year because of this," Scott said last month "Subsequent years will certainly be more expensive."