BOARD MEETING DATE: March 16, 2001 AGENDA NO. 7

On February 16, 2001, the Board voted to allocate $6 million of the AES settlement to be used for natural gas fueling station infrastructure projects with public access within the four-county region, principally outside the City of Los Angeles.

The AQMP identifies the use of alternative clean fuels in mobile sources as a key attainment strategy. Alternative fuel vehicles, such as natural gas vehicles (NGVs), have demonstrated significantly lower VOC, NOx, CO and toxic emissions than gasoline vehicles. The AQMP identifies the use of alternative clean fuels in mobile sources as a key attainment strategy. The 1190 rules also require implementation of alternative fuel heavy-duty vehicles in public fleets in the Basin. These new rules have set the stage for widespread penetration of clean fuel and low emission technologies.

Those fleets that are impacted by Rules 1191, 1192, 1193, 1194, 1195 and 1196 will benefit from additional fueling infrastructure, with public access, in place as soon as possible to effect a smooth transition to an alternative fuel fleet. In order to meet public and private fleet fueling needs new natural gas fueling infrastructure needs to be developed in areas where these fleets operate. New infrastructure will diminish the current obstacle of the lack of fueling locations throughout the greater Los Angeles basin.

1. Request for Proposals
The proposed RFP will provide cost-share funds to assist public and private fleets to establish natural gas fuel dispensing facility projects for public access in the four county areas, principally outside of the city of Los Angeles. The total amount of the RFP will be $4,600,000, using funds from the AES settlement. This funding is designed to offset capital investment costs, resulting in conveniently located, publicly accessible fueling stations. In addition, they will help implement and increase widespread penetration of low emission, alternative fuel, and heavy-duty vehicles in public, commercial and private fleets. Furthermore, these projects will provide applicants and other alternative fuel vehicle participants experience and knowledge of alternative fuel and hydrogen compatible storage and dispensing systems. These participants include state and local governments, as well as automobile manufacturers, alternative fuel suppliers, storage and equipment component manufacturers, and consumers.

Applicants must be either public agencies or private entities. Projects to assist public agencies to establish alternative fuel dispensing facilities in California are eligible. Grant funds can only be requested for storage, dispensing, and/or electronic point-of-sale (EPOS) equipment at designated fueling facilities. Funding for EPOS equipment shall have universal capability (i.e., it must accept Voyager, Visa, Mastercard and other proprietary cards where applicable). For this RFP, funding will only be provided for natural gas fueling stations. While the RFP does not require components to be currently hydrogen compatible, it provides for additional points for considering such hydrogen compatibility issues. In any event, staff believes that natural gas fueling stations are inherently hydrogen-compatible because the fuel may be used to generate hydrogen.

The level of required cost share is based upon the amount of grant funds requested (See table below). The cost share shall be based upon cash expenditures, (i.e. land/lease, equipment, engineering, permits, installation, etc.). In-kind services shall not exceed 10 percent.

Total Project Cost	Maximum AQMD Cost Share
Up to $100,000	70 percent of project cost
$100,001 - $500,000	50 percent of project cost
Above $500,000	30 percent of project cost

2. New or Upgraded Natural Gas Fueling Stations
Pickens Fuel Corp (PFC) has tendered a proposal for developing much needed new natural gas infrastructure provided the AQMD would support a percentage of the capital development costs as the Carl Moyer Program does. PFC has identified strategic sites that are necessary to serve the high mileage fleet operators, such as taxicabs and transit agencies. The station sites are based on the lack of infrastructure relative to the fleet serving area and/or the need to develop larger natural gas compressor based systems that will provide sufficient volume during peak fueling periods. The defined station areas include:

West Los Angeles	Pasadena
Mid Wilshire	San Gabriel
Burbank Airport	South Orange County

The new proposed stations will employ state-of-the-art technology and capability. Each will have dual compressors capable of 600 to 1000 SCFM (300-500 gasoline gallon equivalent per hour), new dispensers capable of 3600 psi, equipment enclosures, new card readers which can read Visa and MasterCard and will have online diagnostics. Each station will cost approximately $610,100 for a total cost of all 7 stations to be $4,270,700. PFC is requesting $200,000 per station from the AQMD to offset the capital cost of the stations. Staff recommends that the AQMD provide up to $1,400,000 to help defray the cost of these new stations. Funds would come from the AES settlement. Proposed cost share for these seven new station is:

PFC	$2,170,700
Ford Motor Co.	$ 700,000
AQMD	$1,400,000
	$4,270,700

The AQMP relies on the expedited implementation of advanced technologies and clean–burning fuels in Southern California to achieve air quality standards. By constructing more natural gas fueling facilities, benefits from this project will accrue to all cities and area residents. Such new construction will provide a coordinated effort, plan for growth of the overall infrastructure, and help reduce costs associated with duplication of effort. There are economies of scale captured as a result of so much infrastructure being planned and installed, possibly reducing the cost of infrastructure and making alternative refueling stations more affordable. While having no direct impact on air emission reductions, new natural gas stations will help facilitate the introduction of low emission, natural gas fueled vehicles (NGVs) initially in private and public fleets in the area. Such increased penetration of NGVs will provide direct emissions reductions of NOx, VOC, CO, PM, and toxics throughout the Basin.

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 provisions B.2.d (1) other circumstances, including projects involving cost-sharing by multiple sponsors. It is in the best interest of the AQMD to cosponsor the proposed projects, as they include significant cost sharing by the various participants which include Pickens Fuel Corp and Ford Motor Company.

Pickens Fuel Corp
Over the past five years, Pickens Fuel Corp (PFC) and its predecessor company, MESA Environmental, have constructed 14 CNG and 2 LNG fueling stations. PFC now owns and operates over 30 natural gas fueling stations consisting of both compressed natural gas (CNG) and liquefied natural gas (LNG). PFC is also actively working to expand infrastructure through partnerships with public and private fleets. On average each of PFC’s stations have an average annual station throughput of more than 200,000 gallons each.

PFC will own and operate the new stations. However, based on their projected throughput, PFC believes that, when combined with the AQMD’s support, these stations can be economically sustainable over time. Furthermore, PFC will commit to operating the stations for a minimum of five years. In the unlikely event a station proves to be economically un-viable after the five year period, PFC would have the right to either move the equipment to another location in SCAQMD or sell it to the host for an agreed upon price.

PFC’s commitment to the natural gas industry is evidenced through the many projects that it has now underway. In Arizona, a new public access CNG station is being constructed at the East-side of Sky Harbor International Airport. PFC owns and operates another facility on the West-side of the Airport. In Northern California, PFC is busy with three new stations: one at 3^rd & 23^rd Streets in San Francisco, one at Norcal Waste System’s base in Bisbane (LNG) and the third at Oakland International Airport. PFC’s public access station in Seal Beach, California has tripled its volume over the past year. This station was built with the City of Seal Beach as an anchor tenant. After two years of operation, due to the increase volume of gas being purchased, PFC upgraded the station’s high-pressure storage to accommodate the increased demand during peak fueling periods. PFC and Ford Motor Company will be cost sharing the new stations in the amounts of $2,170,700 and $700,000 respectively. PFC has requested additional funding from the AQMD to cost-share all seven sites at $200,000 each. The total amount of AQMD funding for this project shall not exceed $1,400,000.

In accordance with the AQMD’s consulting and contracting policies, a public notice advertising the RFP and inviting bids will be published in the following publications:

1.	Antelope Valley Press	10.	La Opinion	19.	Precinct Reporter
2.	Black Voice News	11.	La Voz	20.	Rafu Shimpo
3.	Chinese Daily News	12.	Los Angeles Daily News	21.	Riverside Press Enterprise
4.	Eastern Group Publications	13.	Los Angeles Sentinel	22.	San Bernardino Sun
5.	El Chicano	14.	Los Angeles Times	23.	Santa Clarita Signal
6.	Excelsior, The	15.	M/W/DVBE Source	24.	State of California Contracts
7.	Inland Empire Hispanic News	16.	Orange County Register		Register
8.	Inland Valley Daily Bulletin	17.	Palm Springs Desert Sun
9.	Korea Central Daily	18.	Philippine News

Additionally, potential bidders will be notified utilizing the Los Angeles County MTA and Cal Trans Directories of Certified Minority, Women, Disadvantaged and Disabled Veterans Business Enterprises; the Inland Area Opportunity Pages Ethnic/Women Business & Professional Directory; AQMD’s own electronic listing of certified minority vendors; and AQMD Purchasing’s mailing list. Notice of the RFP will be mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce and business associations; and placed on the Internet at AQMD’s Web site [http://www.aqmd.gov, "Business and Job Opportunities" icon] and AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.

Proposals received will be evaluated by a diverse, technically qualified panel in accordance with criteria contained in the attached RFP.

Funding for the RFP, in the amount of $4, 420,000 will come from the settlement with AES. Funding for the new natural gas stations, in the amount of $1,400,000, will also come from the settlement with AES.

RFP #P2001-35 for RFP for Natural Gas Fueling Station Infrastructure with Funds Received from AES Settlement

South Coast Air Quality Management District