BOARD MEETING DATE: May 3, 2002
AGENDA NO. 5

Execute Contract for Maintenance and Management Services for Fast Fill Compressed Natural Gas Fueling Station at AQMD Headquarters

SYNOPSIS:

AQMD is in the process of upgrading its natural gas fueling station to accommodate the growing alternative fuel vehicle fleet. The station will require periodic preventive maintenance and service in the event of equipment failure or breakdown. Pinnacle CNG Company, the vendor installing the new natural gas equipment, is recommended to provide CNG maintenance and management services in an amount not to exceed $175,000 for a period of five years.

COMMITTEE:

Administrative, April 12, 2002

RECOMMENDED ACTIONS:

1. Authorize the Chairman to establish the Fast Fill CNG Fueling Station Enterprise Fund to administer all activities, transactions and funding relating to the CNG fueling activities at the AQMD.
   
    
2. Transfer $25,000 from the General Fund to the Fast Fill CNG Fueling Station Enterprise Fund.
   
    
3. Authorize the Chairman to execute a contract with Pinnacle CNG Company for maintenance and management services for a fast fill compressed natural gas fueling station at AQMD headquarters, in an amount not to exceed $25,000 for the first year, increasing by $5,000 for each subsequent year, for a period of five years at a total cost not to exceed $175,000 from the Fast Fill CNG Fueling Station Enterprise Fund.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Air quality and health impacts of diesel exhaust have led the AQMD and others to focus attention on reducing diesel exhaust emissions from heavy-duty vehicles. In addition, light-duty alternative fuel vehicles, such as natural gas vehicles (NGVs), have demonstrated significantly lower VOC, NOx, CO and toxic emissions than gasoline vehicles. AQMD’s Clean Fleet Vehicle rules require the use of low emission, alternative fueled transit buses, shuttles, refuse trucks, school buses, street sweepers, and other public fleets of heavy-duty vehicles where applicable.

Currently, there is insufficient fueling capacity for the AQMD compressed natural gas (CNG) vehicle fleet as well as lack of publicly accessible CNG fueling infrastructure in the eastern Los Angeles County region near the 60 and 57 Freeway corridors. With the increased penetration of NGVs in the near future, expansion of the current alternative-fuel refueling facilities in this and other areas to support these vehicles will be needed.

At its September 21, 2001 meeting, the Board approved the execution of a contract to build and operate a new natural gas fueling station at its Diamond Bar facility that can accommodate the growing District alternative fuel vehicle fleet. The project will provide a turnkey fast fill CNG fueling station and is scheduled for completion by the summer of 2002.

Proposal

Staff recommends that the Board approve the proposed contractor, Pinnacle CNG Company (Pinnacle), to provide maintenance and management services for the new CNG fueling station for a period of five years. The contractor will be completely responsible for the equipment maintenance and any repairs or replacements due to equipment failures or breakdown. These maintenance and management services agreements must be in place before the station becomes operational this summer.

A cost proposal for maintenance services was submitted with the fueling station construction bid by Pinnacle. The cost for these services is based upon the amount of fuel used. The proposed cost is $0.225 per gasoline equivalent gallon (GEG) pumped. One GEG is equal to 1.2 Therms or 120,000 BTUs. The AQMD CNG vehicle fleet currently consists of 110 cars with plans to convert the remainder of the car and medium-duty vehicles to CNG over the next three years resulting in a CNG fleet of more than 250 vehicles. FY 2002-03 CNG usage will be about 50,000 GEG per year.

Pinnacle CNG Company has also proposed to manage the fueling operations of the AQMD station for an additional $0.15 per GEG. Included in this station management proposal are the following:

• 24 Hrs auto-dialing "Help Phone" at the fueling dispenser area
• Automated notice (3-minute) to Pinnacle of CNG service interruption
• 2 Hr response time for fueling service interruption
• Remote video monitoring access of CNG fueling island
• Remote computer telemetry monitoring
• Detailed SCAQMD vehicle fueling reports (paper and electronic)
• Monthly SCAQMD fleet summary reports (paper and electronic)
• Total station monthly summary reports (paper and electronic)
• Public access CNG marketing and billing services
• Collection and remittance of state and federal CNG fuel taxes
• Monthly reconciliation of all CNG receipts and utility billings
• Direct payment of utility services (gas & electric) from CNG receipts received
• Free station and billing software upgrades during the term of the contract
• SCAQMD access to all Pinnacle operated fueling sites (waived transaction fees)

Since this fueling station will be accessible to the public using a variety of personal credit cards, the management services proposed by Pinnacle will remove the need to contract with a third party service provider to process credit card transactions. This function is provided as part of Pinnacle’s management services proposal. An enterprise fund will be established to account for the various CNG fueling activities, costs and credits.. This fund will allow the recovery of taxes, gas costs and overhead from the public sales of CNG. The complete management of this fund and the various activities, transactions, records and payments associated with CNG fueling operations would require significant AQMD resources. The utilization of the Pinnacle management proposal will minimize the additional AQMD staff burden and ultimately be more cost effective for the AQMD.

The replacement of the fueling station and planned fleet growth this year could increase that usage to more than 100,000 GEG per year. Costs for the proportionate share of maintenance services associated with public access fueling will be incorporated into the fuel costs and remitted separately to the maintenance and management services provider. This proposal is to execute a contract for maintenance and management services for the new fast-fill CNG vehicle fueling station with Pinnacle CNG Company for five years at a total cost not to exceed $175,000 with the condition that no more than $25,000 be expended during FY 2002-03. Funding authorization for the first year of this agreement is requested in this letter (recommendation 2.) Subsequent years funding will be included in the annual budget requests.

Benefits to AQMD

The proposed project is included in the March 2001 update of the Technology Advancement Plan under Project 2001 CFM3-1 "Development and Demonstration of Advanced Natural Gas Systems for Refueling Stations." The AQMP relies on the expedited implementation of advanced technologies and clean–burning fuels in Southern California to achieve air quality standards. While not providing any direct emission reductions, the proposed station will assist in the commercialization of natural gas heavy-duty vehicles by providing a reliable source of fuel.

Sole Source Justification

Section VIII.B.2 of the Procurement Policy and Procedure identifies four major provisions under which a sole source award may be justified. This request for a sole source award is made under the provisions B.2.c.(2): the project involves the use of proprietary technology; and B.2.c.(3): the contractor has ownership of key assets required for project performance (replacement parts and system components). It is in the best interests of the AQMD to contract with Pinnacle CNG Company for maintenance and management services for the AQMD fast-fill CNG fueling station.

Pinnacle CNG Company, based in Midland, Texas has developed and owns several patents to its unique hybrid compressor as well as its overall fueling station design. They are well qualified to service and maintain this equipment and they are the only source with direct access to the necessary parts and first-hand experience with the operation and repair of that equipment.

Resource Impacts

A transfer from the General Fund is required in the first year to establish the enterprise fund. Subsequent years’ funding will be available from the revenue generated from the sale of CNG. It is estimated that AQMD costs for this maintenance service agreement will be approximately $25,000 the first year, increasing by $5,000 each subsequent year through the five-year agreement. These cost projections are summarized in the following table:

Estimated Maintenance & Management (M&M) Services Costs
 

Revenue derived from the sale of fuel to the AQMD, the public and other government agency clients will include the costs of equipment maintenance and management fees, AQMD overhead, taxes, natural gas and other related costs.

/ / /