HomeMy WebLinkAboutIR 7881 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 7881
To the Mayor and Members of the City Council December 6, 1994
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Subject: ALTERNATIVE FUELS PROGRAM
On November 30, 1993 (I.R. 7775), the City Council was briefed on plans to request
approximately $1.1 million through the Congestion Mitigation and Air Quality (CMAQ)
Program for the purchase and/or conversion of 844 City vehicles over a three-year period
to use propane. On January 6, 1994, the Regional Transportation Council was requested
to consider the City for additional CMAQ funds in the amount of$1.3 million in order that
the same number of vehicles could be purchased and/or converted to use compressed
natural gas (CNG).
CMAQ funds can be used to pay up to 80 percent of the incremental cost of the
purchase price of a new alternative fuel vehicle or conversion of an existing vehicle to
operate on an alternative fuel. Vehicles for which funding is received must travel a
minimum of 9,000 miles per year in the non-attainment area and be maintained in the
City's fleet for three years. Bi-fueled vehicles must be operated using the alternative fuel
for a minimum of 90 percent of the vehicle miles traveled each month.
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On April 5, 1994 (I.R. 7818), the City' Council was informed that CMAQ funding in the
amount of $1,206,727 had been allocated by the Regional Transportation Council to
purchase and/or convert 822 vehicles over the next three years to propane. It was also
indicated 'that all funds for the Western Subregion had been allocated and it would be
months before it would be known whether the additional funds which were requested
would be available to utilize CNG as an alternative fuel to the same extent as had been
planned for propane.
During the April 5, 1994, City Council work session, information was presented for both
propane and CNG on conversion costs, ranges, cost of refueling facilities, and the cost
of the fuel. Based on that information, it was the staff's opinion that more benefits would
be derived from conversion of City vehicles to propane than CNG. Approval was
requested and received to (1) proceed with conversion of City vehicles to propane as
outlined in the plan submitted to the NCTCOG requesting CMAQ funds, and (2) identify
and pursue options available to develop both City and public-use refueling facilities for
propane fueled vehicles.
On August 23, 1994 (M&C C-14451), the City Council authorized execution of an
agreement with the Texas Department of Transportation to receive reimbursement not
to exceed $54,348 for the conversion of 38 City vehicles to use propane as an alternative
fuel prior to December 29, 1994. Under a purchase agreement with Propane Systems
of Texas (M&C P-7008 dated July 26, 1994), 19 conversions have been completed to
date at a cost that is within the $1,600 to $1,800 per vehicle range that was given as an
estimate to the City Council on. April 5, 1994. It was estimated that to do a similar
conversion for CNG would cost between $3,600 and $3,800per vehicle. According to
information from other entities that have done CNG conversions, their actual costs have
ISSUED BY THE CITY MANAGER FORT wnRTU TFYec _..._
INFORMAL REPORT TO CITY, COUNCIL MEMBERS No. 7881-
411-PTKA,o
OP, To the Mayor and Members of the City Council December 6, 1994
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Subject: ALTERNATIVE FUELS PROGRAM
ranged from $2,950 to $3,600 per vehicle.
The Council was informed that development of a fast fueling facility for CNG on City
property was estimated to cost $330,000. To develop a propane refueling facility with
the same capability -on City property was estimated to cost between $50,000 and
$70,000. It was indicated that the City had recently paid $.79 per gallon for unleaded
gasoline, $75 per gallon for CNG, and $.54 per gallon for propane. It was also indicated
that bulk sales, supplies, and seasonal demands would effect fuel costs.
A couple of options were explored to determine how fuel might be purchased and
refueling facilities developed. What was finally decided upon was an agreement that
would provide fuel as well as the acquisition of tanks and dispensing equipment over a
five-year period. The five-year period includes a one-year purchase agreement with four
one-year options to renew. Annual costs of this agreement are projected in Table 1,
Attachment 1. The purchase agreement also contains a provision that allows the City to
purchase the tanks and dispensing equipment at the six refueling locations at the end
of each year. Estimates on what those costs would be are reflected in Table 2,
Attachment 1. Fuel costs and tank and dispensing equipment costs are close to the
estimates previously given to the City Council.
Attachment 2 indicates chronologically-the sequence of events that have led to the staff's
recommendation that a.purchase agreement be authorized with Chadwell & Son, Gas
Company to provide propane fuel, tanks, and dispensing equipment.
Additional information can be provided upon request.
Bob Terrell
City Manager
Attachments
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
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~ ATTACHMENT }
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Alternate Fuels Program
Projected Annual Costs
'Margin
"E��inna�*d "Eojnaated Total
'Mont-Belvieu Delivery Equipment Estimated Annual
Posting Cost Cost Gallons Costs
Yr. 1 .36 .23 .23 257.148 $210.857
Yr. 2 .36 .23 .11 261,000 $182J00
Yr. 3 .36 .23 .07 350,000 $231.000
Yr. 4 .36 .23 .07 350.000 $231.000
Yr. 5 .36 .23 17 850,000 $231l�00
'Mont-Belvieu posting over past 12 months has ranged from $.24 to $.36 per gallon.
Highest price has been used in this analysis and held constant for five-year period.
"KAargin (or markup) is the price bid by vendor to cover delivery costs and hank and
dispensing equipment costs.
3Sto1e contract is Mont-Belvieu posting, currently $.36 per gm||nn plus $.23 per delivered
gallon. Total price currently under State contract |e $.5Q per gallon for purchase and
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delivery. For this analysis $.23 has been used as delivery cost and held constant for
��` five-year period.
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'Estimated equipment cost is that portion of margin attributed to acquisition and installation
of tanks and dispensing equipment.
TABLE 2
Alternate Fuels Program
Estimated Capital Costs
Eat. Annual 'Est.
Equip. Estimated Equipment Year-End Cost Ea.
Costs Gallons Costs Buyout Facili /
Yr. 1 .23 257.143 $ S0.142 $300.000 $59f57
Yr. 2 .11 261.000 $ 28.71D $240.000 $44.785
Yr. g D7 350.000 $ 24.5QD $180.000 $34.083
Yr. 4 D7 350.000 $ 24.5OO $120.000 $24.083
Y/. 5 .87 350.000 $ 24.GQQ $ G0'DOO $14.083
'Six refueling facilities are provided through this purchase agreement. The original
estimate given to the Council in April 1994 was that afaci1(ty would cost between
$50.000 and $70.000. Figures indicate the estimated costs for tanks and dispensing
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equipment at each site should City exercise year-end buyout option. If during
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five-year period City chooses not to exercise option to nonew. Contractor would be
be required to remove tanks and equipment without cost to the City.
Attachment 2
LPG Dispensing Equipment & Product
Bid Quotation #940424
Month of October (10/93)
Preliminary discussions with the Fire Department, etc., as to the requirements and concerns on
the use of LPG as a motor fuel.
Month of July (07/94)
Specification prepared for the LPG Dispensing Equipment & Product.
Month of August (08/94)
Specification reviewed by Department of Law. Minor changes noted and made to the
specification.
Specification reviewed by Risk Management. Several insurance coverage changes noted and
made to the specification.
(8/30/94) Specification prepared. The Purchasing Division mails specification to eight (8)
prospective vendors. The vendors were as follows:
Lone Star Energy Company Suburban Propane
Dallas, Tx 75201 Kennedale, Tx
Propane Systems of Texas Gene Harris Propane
Fort Worth, Tx Fort Worth, Tx
Godfrey Butane-Propane Company Mesa Environmental
Arlington, Tx Fort Worth, Tx 76110
Chadwell & Sons Barney Holland Oil Co.
Springtown, Tx 76082 Fort Worth, Tx 76106
Month of September (09/94)
Purchase of LPG and associated dispensing equipment was advertised by Purchasing on
September 8, 1994 and September 15, 1994. Advertisement indicated mandatory attendance.at
all prebid meetings.
(09/13/94) Purchasing Division and ESD conducted a MANDATORY PREBID TOUR of the
proposed refueling locations.The following vendors were present as required by the specification:
Lone Star Energy Company Suburban Propane
Dallas, Tx 75201 Kennedale, Tx
Chadwell & Sons
Springtown, Tx 76082
(09/16/94) Purchasing Division and ESD conducted a MANDATORY PREBID DISCUSSION of
the proposed specifications. The following vendors were present as required by the specification:
Lone Star Energy Company Suburban Propane
Dallas, Tx 75201 Kennedale, Tx
Chadwell & Sons
Springtown, Tx 76082
(09/20/94) First addendum issued by the Purchasing Division to change the original bid opening
date from September 22, 1994 to October 13, 1994. This addendum was executed at the
unanimous request of the prospective vendors to ensure they had ample time to prepare their bid.
Month of October (10/94)
At the recommendation of Risk Management, and due to unanimous vendor request, the
requirement for Environmental Impairment/Pollution Liability and Professional Liability coverages
were dropped resulting in the second addendum issued by the Purchasing Division. These
coverages were deemed unnecessary following discussions with the Railroad Commission of
Texas.
(10/13/94) Bid Quotation #94-0424 opened and two (2) bids are read and tabulated. The bidders
were as follows:
Suburban Propane Chadwell & Sons
Kennedale, Tx Springtown, Tx 76082
Lone Star Energy Company of Dallas, Texas, the third preapproved vendor, did not submit a bid
for review by the City of Fort Worth.
Month of October (10/94)
(10/13/94) Suburban Propane of Kennedale, Texas, places a clause in their bid document which
subjects their proposal to approval by Suburban Propane management following council approval.
Upon review by the Department of Law, the bid proposed by Suburban Propane is deemed
unacceptable.
The Equipment Services Division receives one (1) bid from the Purchasing Division for review.
On October 26, 1994, ESD recommended to the Purchasing Division that a purchase order be
issued to Chadwell & Sons Gas Company of Springtown, Texas.
(10/25/94) Suburban Propane of Kennedale, Texas, withdraws their bid proposal from further
consideration. This is accomplished via letter to the Purchasing Division.
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