AGENDA #1e
TO: W. Calvin Horton, Town Manager
FROM: Bruce Heflin, Public Works Director
SUBJECT: Alternative Fuel Vehicles
DATE: April 2, 2003
This budget working paper provides information on the status of the Town’s efforts to incorporate the use of alternative fuel vehicles in the Town’s automotive fleet.
BACKGROUND
We submitted a Mobile Source Emissions Reduction grant application to the Division of Air Quality, Department of Environment and Natural Resources, State of North Carolina on December 17, 1998. On April 5, 1999, the North Carolina Department of Environment and Natural Resources notified us that our grant application had been approved for $85,100, which funded about 85% of our request. We subsequently developed a request for proposals for the installation of compressed natural gas refueling equipment to be installed at the Public Works Compound and the Parks and Recreation Administration building. We also ordered six vehicles, including two electric pick-up trucks, two CNG sedans, one CNG van and one CNG pick-up truck. We completed installation of all refueling equipment during the summer of 2000. In FY 2000/2001, we purchased three more CNG pick-up trucks. No alternative fuel vehicles were added to the fleet in FY 2001/2002; however, we plan to add two additional vehicles in FY 2002/2003. The distribution of our current alternative fuel vehicle fleet is as follows:
1 - Dedicated CNG, Ford Crown Victoria, Sedan Police Department
1 - Dedicated CNG, Ford Crown Victoria, Sedan Parks and Recreation Department
1 - Bi-fuel CNG/Gasoline, Ford Pick-up Truck Parks and Recreation Department
1 - Dedicated CNG, Dodge 16-passenger Van Police Department
1 - Electric, Ford Ranger Pick-up Truck Public Works Department
1 - Electric, Ford Ranger Pick-up Truck Engineering Department
1 - Dedicated CNG, Ford Pick-up Truck Transportation Department
2 - Dedicated CNG, Ford Pick-up Trucks Public Works Department
Since August 1999, the Internal Services Superintendent, Public Works Department, has represented the Town as a member of the Triangle Clean Cities Designation Project Steering Committee sponsored by the Triangle J Council of Governments. On March 19, 2001, the Mayor signed the Clean Cities Coalition memorandum of understanding committing the Town to continuing our participation in the Clean Cities program and continuing our efforts to increase the use of alternative fueled vehicles. We expect that the Clean Cities designation for the Triangle region and our continued participation in this effort will lead to the availability of grant funds for which we were previously ineligible. At the appropriate time, we will investigate the availability of grant funds to assist us in expanding our alternative fuel infrastructure at the new Town Operations Center that is currently being planned for construction on Millhouse Road.
This paper will discuss the costs and benefits of several types of alternative fueled vehicles, some of which the Town is already using. The primary benefits associated with all of these alternative fuels are reduced harmful exhaust emissions, improved outdoor air quality and reduced reliance on foreign oil for fuel supplies. In almost every case, there is a trade-off between the cost of vehicles, the cost of fuel and the range of the vehicles. As a general rule, the decision to use alternative fueled vehicles would be based on concerns over reducing air pollution and reducing reliance on foreign oil, not on reducing the cost of purchasing and operating the vehicles and not on reduced energy consumption.
Energy Policy Act of 1992 (EPACT)
The Energy Policy Act of 1992 authorizes the Department of Energy (DOE) to pursue a rulemaking concerning alternative fueled vehicle acquisition requirements for private and local government fleets. Federal, State and utility company fleets are already under EPACT mandates for alternative fuel vehicle acquisition requirements. In 2000, DOE published an “Advanced Notice of Proposed Rulemaking and Notice of Public Hearings” on this matter with respect to private and local government fleets. The public hearings were conducted during 2001 and DOE began analyzing the issues surrounding this proposed rulemaking, including input received at the public hearings. To date, no rulemaking has been issued on this subject; therefore, the acquisition of alternative fuel vehicles remains voluntary for local governments.
Compressed Natural Gas (CNG)
The Town now has seven CNG vehicles in operation and we expect to order two more in FY 2002/03. Some of the reasons that we selected this technology over others are:
· Natural gas is piped to most of our facilities. The fuel is readily available.
· A variety of CNG vehicles is available on the State contract.
· The reserves of domestically supplied natural gas are reported to be very large.
The attached “Comparative Life-Cycle Cost Analysis” shows cost estimates for two types of CNG vehicles currently in the Town’s fleet. The increased purchase price for the CNG vehicles is about $3,000 to $4,000 per vehicle. Over the past year, the operating costs for gasoline and CNG vehicles have been extremely volatile as the relative prices of the fuels have changed. Recent increases in gasoline prices have made CNG use more favorable. Prior to the recent jump in gasoline prices, it was 60% more expensive to use CNG over gasoline. The literature on CNG vehicles suggests that there may be some minor savings on maintenance costs; however, we have not had our vehicles long enough to test this theory. For the purposes of our analysis, we are assuming that maintenance costs will be about the same.
The overall analysis shows that, depending on the make and model of the vehicle, it is about 16% to 22% more expensive to purchase and operate CNG vehicles. This equates to about $5,000 over the 7-year service life of the vehicles. About 75% of this cost on our first four CNG vehicles was reimbursed by our Mobile Source Emissions Reduction grant. The Mobile Source Emissions Reduction grant program was not funded in FY 2002/2003; therefore, the additional cost for the alternative fuel vehicles purchased this year will be borne by the Town.
Some of the disadvantages associated with CNG technology are:
The Town entered into a three-year lease agreement for two electric Ford Ranger pick-up trucks in April 2000. Due to production difficulties and product recalls, Ford Motor Company delayed the production and delivery of these vehicles several times. The vehicles were delivered to the Town during December 2001. The primary advantage of these, and any other electric vehicles, is that they produce no harmful emissions. The purchase price of these vehicles is extremely high at about $36,500 per vehicle, as compared to about $11,300 for comparable gasoline-powered pick-ups. The cost of ownership includes replacement of the battery packs every three years at an additional cost of about $14,000 per vehicle. Based on advice from the Ford Motor Company, we elected to lease these vehicles for three years for a total of $15,300 per vehicle. Ford Motor Company has notified all of their customers that the leases on their electric Ford Ranger’s will not be extended. Ford is terminating the electric Ranger program and they intend to recover all of the vehicles at the end of the current lease periods.
As shown in the attached analysis, the cost of acquiring and operating these vehicles is about 222% of the cost of owning and operating a comparable gasoline fueled vehicle. This includes the fact that there is very little maintenance cost with the lease agreement and that the cost of fuel (electricity) is estimated at about half the cost of gasoline for the same miles traveled. The incremental cost of operating these vehicles equates to about $20,200 per vehicle. About 75% of this cost was be reimbursed by our Mobile Source Emissions Reduction grant.
Some of the disadvantages associated with electric vehicle technology are:
Ethanol (Marketed as E-85, a mixture of 85% ethanol and 15% gasoline.)
Some manufacturers have begun producing “flexible fuel” vehicles that can run on more than one kind of fuel without modifications to the vehicle. One such vehicle is the flexible fuel Ford Taurus, which can burn either E-85 or gasoline. The Town now has nine of these vehicles in the fleet. The primary advantages of these cars are reduced harmful emissions and the fact that there is no increased purchase price over a standard gasoline model.
As shown in the attached analysis, the current market price of E-85 is about 1.8 times as much as gasoline. This cost differential is compounded by the fact that E-85 is only about 80% as efficient as gasoline, resulting in reduced mileage and vehicle range. At current market prices, we estimate that the cost of operating an E-85 vehicle would be about 9.2% over the cost of a comparable gasoline vehicle. This equates to about $2,200 over the 7-year service life of the vehicles.
Some of the disadvantages associated with the use of E-85:
Biodiesel is a vegetable oil product, typically made from soybeans. It is usually marketed as blended B-20, a mixture of 20% biodiesel and 80% regular diesel fuel. It can be burned in any diesel engine equipment, including transit buses, without vehicle modifications. According to major suppliers, B-20 is readily available in the market and can be delivered to our existing diesel fuel tanks without tank cleaning or tank modification. As with other alternative fuels, the primary benefits are reduced harmful emissions and reduced reliance on foreign oil.
Under EPACT, the Federal Government, state governments and fuel providers are obligated to purchase alternative fuel vehicles for a specified percentage their total annual vehicle purchases. For every 2,250 gallons of blended B-20 used, the user gets credit for one alternative fuel vehicle acquisition, up to 50% of their obligation. Earning one of these “credits” allows an organization to reduce the required number of purchases by one vehicle in any given year. If the Town began using B-20 for the entire fleet (excluding transit buses), we would consume about 85,000 gallons per year, thus earning about 44 alternative fuel vehicle acquisition credits. Since B-20 may cost up to $0.25 per gallon more than regular diesel fuel, the annual cost to the Town could be about $21,000. Including our transit bus fleet would increase the cost and the number of alternative fueled vehicle credits earned.
Our plans to make the transition to biodiesel are currently on hold due to recent sharp increases in the market price of diesel fuel.
In the event that EPACT mandates are expanded to include municipal governments, the Biodiesel option would be one way to achieve compliance quickly with little or no capital equipment costs. Because there are no specialized vehicles to buy and no specialized fuel storage tanks to buy, this decision could be implemented by simply ordering B-20 for delivery to our existing diesel tanks. This course of action would permit us to take time to analyze all of our options more thoroughly before making a long-term commitment to a particular alternative fuel technology.
Some of the disadvantages associated with the use of biodiesel:
Summary of Experience to Date
Our experience with owning and operating alternatives fuel vehicles has been typical of most agencies that are experimenting with this emerging technology. As expected, the acquisition and operating costs of these vehicles has been higher than for conventionally fueled vehicles. We have assigned our two electric vehicles to missions suited to their limited range and they have performed acceptably in those roles. Out-of-town trips for this vehicle have been limited to nearby towns such as Hillsborough or Cary. The reduced range of the CNG vehicles has been a minor problem in some missions due to the limited availability of refueling stations away from the Town. One of our CNG sedans has made successful trips to Charlotte and to Asheville; however, many Town staff member are reluctant to risk being stranded away from Chapel Hill without a highly reliable source of CNG refueling. We have also received some feedback that there is a minor inconvenience due to the need for more frequent trips to refueling facilities for CNG vehicles. The on-road performance of CNG vehicles has been comparable to gasoline fueled vehicles; however we have had more than expected maintenance problems with CNG vehicles. The most common failure had been gas leakage at the filler nozzle. Nearly all of our CNG fleet has had to be returned to the dealership for warranty repairs on this problem. Some have had two or more trips to the dealership for the same problem. On at least two occasions we have experienced failure of the fast-fill CNG refueling station at Public Works. On both occasions the equipment was repaired within three days resulting in only a minor inconvenience. As our CNG fleet grows we will become more vulnerable to operational service interruptions due to our limited refueling capability. We plan to address this vulnerability by adding additional slow-fill stations located at those departments that are using more than one CNG vehicle.