PROPOSAL:
Amend Incentive Buy-Down Program for CNG Home Refueling Appliance
SYNOPSIS:
On May 6, 2005, the Board approved matching funds with the MSRC and
provided $400,000 for a buy-down incentive program for 400 natural gas
home refueling appliances to broaden the consumer base for NGVs. The
program specified $100,000 to purchase 100 home refueling appliances
through a contract with the home refueling appliance manufacturer,
FuelMaker Corporation and $300,000 to lease 300 home refueling appliances
through a contract with American Honda Motor Company, Inc. (AHMC). AQMD
and MSRC matching funds result in a $2,000 buy-down per home refueling
appliance either purchased or leased. All 100 home refueling appliance
purchases and associated incentive funds are committed; and while demand
for home refueling appliance purchases continues, demand for home
refueling appliance leasing is currently negligible. This action is to
de-obligate $250,000 from the AHMC (or lease) contract and apportion this
amount to the FuelMaker (or purchase) contract; continue the matching
incentive with MSRC of $1,000 per leased home refueling appliance and
commence an AQMD-only sponsored purchase incentive of $2,000 per home
refueling appliance.
COMMITTEE:
Technology, January 26, 2007, Recommended for Approval
RECOMMENDED ACTIONS:
Authorize the Chairman to:
- Amend Contract No. 06017 with American Honda Motor Company, Inc. as
follows:
- Reduce the contract value by $250,000 and return this amount to the
Clean Fuels Fund leaving a total of $50,000 in the contract;
- Continue co-sponsorship of the buy-down incentive program for
leasing a home refueling appliance with the MSRC at $1,000 per unit; and
- Extend the contract performance period by nine months to March 31,
2008.
- Amend Contract No. 06018 with FuelMaker Corporation as follows:
- Increase the contract value by $250,000 from the Clean Fuels Fund;
- Commence an AQMD-only sponsored buy-down incentive program for
purchasing a home refueling appliance and increase incentive from $1,000
to $2,000 per unit; and
- Extend the contract performance period by nine months to March 31,
2008.
Barry R. Wallerstein, D.Env.
Executive Officer
Background
On May 6, 2005, the Board approved cosponsoring and cost sharing with
MSRC a buy-down incentive program for a CNG home refueling appliance and
executing contracts with FuelMaker Corporation and American Honda Motor
Company, Inc. (AHMC) for the purchase and lease of a home refueling
appliance, respectively. The objective of the buy-down incentive program is
to reduce air pollution in the Basin by encouraging the expansion and use of
alternative fuel vehicles by the general consumer.
The buy-down incentive program comprises two sole-source contracts. The
first contract is with AHMC at a cost not to exceed $300,000 toward the
lease of 300 home refueling appliances. The other contract is with
FuelMaker Corporation at a cost not to exceed $100,000 for the purchase of
100 home refueling appliances. Both contracts provide $1,000 incentive per
home refueling appliance. Total funding for the program is $400,000 from
the Clean Fuels Fund to encourage the purchase or lease of 400 home
refueling appliances. The MSRC has identical contracts and terms.
Together, the MSRC and AQMD buy-down incentives provide consumers with a
$2,000 cost saving per home refueling appliance.
The purchase incentive program has been a success, with FuelMaker
securing purchases of all 100 home refueling appliances. The lease program
has not yet resulted in any invoicing of leased home refueling appliances,
and the original $300,000 dedicated to this element of the buy-down
incentive program remains intact. In addition, there is a continued demand
for purchasing the home refueling appliance. The current retail price of
the home refueling appliance is $3,400; the matching incentives of $2,000
reduce this cost to $1,400.
Proposal
This action requests the Board’s approval to revise the contracts with
AHMC and FuelMaker by de-obligating $250,000 of the current $300,000 from
the AHMC contract for the home refueling appliance lease program and
transferring this amount to the FuelMaker contract for the home refueling
appliance purchase program. This action would leave $50,000 in the AHMC
contract The revised funding amounts will translate into an additional 125
home refueling appliance purchases and 50 home refueling appliance leases
and would bring the program total to 275 home refueling appliances.
The lease program will continue as a co-sponsored, cost-shared program
with the MSRC, providing consumers who lease a home refueling appliance with
a combined buy-down incentive of $2,000. The purchase program will continue
as an AQMD-only sponsored program and the AQMD will increase the amount of
buy-down incentive for purchasing a home refueling appliance from $1,000 to
$2,000. The remaining $50,000 for AHMC’s lease program will continue until
such funds are depleted at which time only MSRC funds will be available at
$1,000 per lease. FuelMaker and AHMC have agreed to the proposed contract
amendments. The existing contracts are scheduled to expire on June 30,
2007. As such, staff is requesting the Board extend the performance period
of the two contracts by nine months to March 31, 2008.
Benefits to AQMD
Gasoline and diesel fueled mobile sources are a significant source of
emissions in the AQMD and alternative fueled vehicles are a means of
reducing these emissions. This project will incentivize consumer interest
in alternative fueled vehicles and continue the momentum and expansion of
natural gas home refueling appliances and passenger car alternative fuel
vehicles.
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 provision d (2) Time extension
of an existing contract.
Resource Impacts
No new additional funds are requested for this proposal. Currently there
remains $300,000 of the original $400,000 awarded to this program through
the Clean Fuels Fund. All or part of these funds will continue to be cost
shared with matching funds from MSRC at a rate of $1,000 per home refueling
appliance leased. However, the proposal will permit up to $2,000 per home
refueling appliance purchased with no cost sharing from MSRC and will reduce
the total number of home refueling appliances either purchased or leased
through the buy-down incentive program from the original projection of 400
units.
Proposed Reallocation of Clean Fuels Fund Balance for Contracts 06017 and
06018
| |
Lease Contract
06017 (AHMC) |
Purchase Contract 06018 (FuelMaker) |
| Current Balance |
$300,000 |
$0 |
| Reduced Amount |
$250,000 |
$0 |
| Revised Obligation |
$50,000 |
$250,000 |
| AQMD Incentive |
$1,000* |
$2,000 |
| Home Refueling Appliances Resulting from Revised
Obligation |
50 |
125 |
* Additional $1,000 provided by MSRC
The Clean Fuels Fund is a special revenue fund established from the
state-mandated Clean Fuels Program. The Clean Fuels Program, under Health
and Safety Code Sections 40448.5 and 40512 and Vehicle Code Section 9250.11,
establishes mechanisms to collect revenues from mobile sources to support
projects to increase the utilization of clean fuels, including the
development of the necessary advanced enabling technologies. Funds
collected from motor vehicles are restricted, by statute, to be used for
projects and program activities related to mobile sources that support the
objectives of the Clean Fuels Clean Fuels Program.
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