BOARD MEETING DATE: September 10, 2010
AGENDA NO. 9

PROPOSAL:

Recognize Funds and Execute Contracts for Natural Gas Fueling Stations under California Energy Commission AB 118 Program

SYNOPSIS:

In May 2010, the California Energy Commission announced AB 118 Alternative and Renewable Fuel and Vehicle Technology Program awards, of which $2.9 million was granted to the AQMD. This action is to recognize these funds into the Clean Fuels Fund, and then execute a contract with Clean Energy for the construction of up to eight CNG and two LNG fueling stations in an amount not to exceed $2,600,000 and a contract with Earth Energy Fuels, Inc. to construct a CNG fueling station in an amount not to exceed $300,000.

COMMITTEE:

Technology, July 23, 2010, Recommended for Approval

RECOMMENDED ACTIONS:

1. Recognize upon receipt $2,900,000 from California Energy Commission (CEC) under the AB 118 program into the Clean Fuels Fund; and

2. Authorize the Chairman to execute contracts with the following entities from the Clean Fuels Fund:

1. Clean Energy for the construction of up to eight CNG and two LNG fueling stations in an amount not to exceed $2,600,000 as set forth in Table 1, or, at alternative locations approved by CEC if a given location becomes unavailable; and

2. Earth Energy Fuels for the construction of one CNG station in an amount not to exceed $300,000.
   

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Alternative fuel vehicles play an important role in Southern California’s efforts to meet the federal standards for fine particulate and ozone. As such, AQMD has a long history in supporting the development and commercialization of alternative fuel vehicles. AQMD recognizes the importance of having a large network of alternative fuel fueling stations as more vehicles are deployed and therefore continues to support the expansion of the natural gas fueling network. Continued expansion of the natural gas fueling infrastructure needs to occur in order to support increased public and private fleet fueling needs and support future incentive program awards through the Chairman’s School Bus Replacement Initiative, the Carl Moyer Program, and the Proposition 1B Program.

AQMD has provided substantial funding for both natural gas infrastructure and vehicles over the years, and has also applied to CEC, DOE and U.S. EPA for funds in this area. In November 2009, CEC released a grant solicitation entitled “Alternative and Renewable Fuel Infrastructure” under the Alternative and Renewable Fuel and Vehicle Technology Program. This solicitation included project areas that store, distribute and dispense transportation fuels such as electricity, ethanol, bio-diesel, and natural gas. The total amount of the grant solicitation was $13.8 million.

In May 2010, CEC announced awards under the Alternative and Renewable Fuel and Vehicle Technology Program, which included two AQMD projects totaling $2.9 million. The two AQMD projects are with Clean Energy for the construction of up to eight CNG and two LNG fueling stations for $2,600,000, and with Earth Energy Fuels, Inc. to construct a CNG station for $300,000. The proposed projects were selected by CEC through a competitive solicitation process.

Proposal

Clean Energy

This proposed project is to construct eight CNG and two LNG fueling stations in the South Coast Air Basin. These stations will provide critically needed natural gas for light-, medium-, and heavy-duty vehicles. In addition, the LNG stations will provide fuel for approximately 500 LNG trucks operating at the ports. This action is to execute a contract with Clean Energy for the following stations in an amount not to exceed $2.6 million:

Table 1

In addition to the above mentioned CEC funding of $2.6 million, Clean Energy will provide up to $7,499,350 as match funding for the ten stations.

Earth Energy Fuels

This project is to construct a CNG station at the Ontario 76 site located at 1850 E. Holt Blvd., Ontario, CA 91761. This station will provide critically needed natural gas for light-, medium-, and heavy-duty vehicles. This action is to execute a contract with Earth Energy Fuels in an amount not to exceed $300,000. In addition to the CEC funding, Earth Energy Fuels and Ontario 76’s station owner will provide up to $1,447,466 as match funding.

Benefits to AQMD

The proposed projects are included in the Technology Advancement Office 2010 Plan Update under “Infrastructure and Deployment.” Also, the AQMP relies on the expedited implementation of low-emission technologies and the implementation of these natural gas infrastructure projects will help the AQMD to achieve its clean air goals.

Sole Source Justification

The proposed projects were selected by CEC through a competitive solicitation process. Section VIII.B.2 of the Procurement Policy and Procedures identifies four major provisions under which a sole source award may be justified.  These requests for sole source awards are made under B.2.c (1): The unique experience and capabilities of the proposed contractor or contractor team, and B.2.d (1): Projects including cost sharing by multiple sponsors. Both Clean Energy and Earth Energy Fuels have extensive experience in constructing and operating natural gas fueling stations. Both proposals include approximately 75% cost-share by the project proponents. Furthermore, these stations fill critical gaps in the region for CNG and LNG, and promote the utilization of the cleanest available fleet and passenger vehicles.

Resource Impacts

Clean Fuels Fund resources, in an amount not to exceed $2.9 million, is proposed to fund the two projects. This amount of funding will be provided by CEC under the AB 118 Program. The funding partners for the two projects are as follows:

Clean Energy

Earth Energy Fuels 

Sufficient funds will be available in the Clean Fuels Fund for these two proposed projects upon receipt of funds from CEC under the AB 118 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 Program.