BOARD MEETING DATE: August 6, 2004
AGENDA NO. 11A
(Continued from the July 9, 2004 Board Meeting)

De-Obligate Prior Funding Commitments and Reissue RFP

SYNOPSIS:

On October 3, 2003, the Board approved release of a $1.5 million RFP to solicit proposals for natural gas refueling station infrastructure projects. Staff believes that sixteen of the twenty-six proposals received deserve funding and proposes that $1,242,323 from de-obligated funding commitments be used to fund some of these projects. This action is to de-obligate prior funding commitments with Pinnacle CNG, CALSTART, Clean Energy, SunLine Services, CryoEquipment Services, Gas Research Institute and Praxair and revert funds back to the Clean Fuels Fund and AES Settlement Fund. Staff is recommending that the RFP be reissued to solicit additional natural gas fueling infrastructure projects with a budget ranging from $726,046 to $1,726,046

COMMITTEE:

Technology, April 23, 2004, Recommended for Approval

RECOMMENDED ACTION:

1. Reduce the March 2003 Board approved funding of $750,000 awarded to Praxair, Inc.; of $137,264 awarded to Cryogenic Equipment Services; and $549,054 awarded to SunLine Services Group from the Clean Fuels Fund to $0. The unspent $1,436,318 will revert to the Clean Fuels Fund to fund other current proposals.
    
2. Reduce the November 2000 Board approved funding of $35,000 awarded to the Gas Research Institute from the Clean Fuels Fund to $0. The unspent $35,000 will revert to the Clean Fuels Fund to fund other current proposals.
    
3. Amend the original amount of $892,615 of existing contract #02157 with Clean Energy to an amount not to exceed $742,364. The unspent $150,251 will revert to the Clean Fuels Fund to fund other current proposals.
    
4. Reduce the July 2001 Board approved funding of $10,350 awarded to CALSTART and $230,000 awarded to Pinnacle CNG from the AES Settlement Fund to $0. The un-spent $240,350 will revert to the AES Settlement Fund to fund other current proposals.
    
5. Amend the original amount of $301,250 of existing contract #02074 with Clean Energy to an amount not to exceed $88,800. The sum of $106,000 had already been de-obligated. The unspent $106,450 will revert to fund other current proposals.
    
6. Authorize the re-issuance of the original Request for Proposals (RFP P2004-09) with a two-month contract preparation/submission period to solicit additional natural gas fueling station project proposals with a budget ranging from $726,046 to $1,726,046 from the Clean Fuels Fund.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

On October 3, 2003, the Board authorized release of RFP #P2004-09 soliciting cost-shared proposals for installing new natural gas fueling facilities within the South Coast AQMD jurisdictional boundaries. 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 such as the Chairman’s School Bus Replacement Initiative and the Carl Moyer Program.

The Board approved a total of $1.5 million from the Clean Fuels Fund to support the RFP. This funding is designed to offset capital investment costs, resulting in conveniently located, publicly-accessible fueling stations. For this RFP, funding was only provided for natural gas fueling stations. Applications were accepted from either public agencies or private entities (i.e. state and local governments, automobile manufacturers, alternative fuel suppliers, manufacturers of natural gas related equipment, and end users of natural gas motor fuel).

Twenty-six proposals were received by December 16, 2003 (the closing date of the solicitation) totaling $4.6 million in requested funding. Sixteen of the twenty-six proposals were deemed technically qualified for a total of $2,742,323 in funds, exceeding the original level of funding authorized for one RFP of $1,500,000. Should the Board approve this request to de-obligate funds, staff recommends setting aside $1,242,323 from the reverted funds to fully fund all sixteen projects. Funding requests are being brought to the Board today in subsequent board letters Agenda Items 11B, 11C, 11D and 11E.

In prior years, the Board has recognized the need for additional natural gas fueling infrastructure, and has awarded funding for several alternative fueling infrastructure projects through the Clean Fuel Funds, the AES Settlement Fund, and from the Rule 1309.1 Priority Reserve Funds. While these actions have resulted in establishing 37 new fueling stations and the upgrade of an additional 27 stations, a few of the proposed projects that were awarded funding cannot be completed due to permitting and contracting issues. As a result, staff is proposing to either fully or partially terminate the remainder of these contracts. The de-obligated funds could be made available to cover the additional funding requests beyond the Board approved allocation of $1.5 million.

Proposal

Table 1 provides a list of eight projects where either partial or entire funding awards are proposed to be de-obligated. As mentioned previously, $1,242,323 has been set aside to fund the remainder of the sixteen proposals deemed qualified. The remaining $726,046 will be reverted to the Clean Fuels Fund and used for future alternative-fuel infrastructure awards. A brief discussion of each of the projects is provided in the following section.

Table 1. Existing Projects Proposed To Be De-obligated
 

Additional funds may become available. Staff is working closely with the Orange County Transportation Authority (OCTA) to go forward with their LNG fleet and fueling infrastructure expansion plans. At the October 2002 meeting the Board awarded $1 million to OCTA. AQMD staff will submit a letter to OCTA requesting resolution of the expansion within 90 days.

CryoEquipment Services

At its April 2003 meeting, the Board awarded $137,264 to CryoEquipment Services to partially offset the installation cost of a new LNG production facility. CryoEquipment Services proposed to construct the LNG production facility on Southern California Gas Company property. However, Southern California Gas Company indicated that the property proposed originally is needed for other purposes. With the possible advent of several LNG terminals being installed on the West Coast, CryoEquipment Services is discontinuing the investment until such time as it can be determined whether the LNG terminals shall not come to fruition. As a result, staff proposes that $137,264 revert to the Clean Fuels Fund and be used to fund the current solicitation.

SunLine Services Group

At its April 2003 meeting, the Board awarded $549,054 to SunLine Services Group in Thousand Palms to partially offset the installation cost of a new LNG production facility. SunLine Services Group recently indicated that, given other operational priorities as well as the possible advent of several LNG terminals being installed on the West Coast, they are discontinuing the investment until such time as it can be determined whether the LNG terminals shall come to fruition. As a result, staff proposes that these funds revert to the Clean Fuels Fund and be used to fund the current solicitation.

Clean Energy, Inc. – Unused Funds

At its August 2001 meeting, the Board awarded $892,615 to Pickens Fuel Corporation (now Clean Energy, Inc.) to upgrade 17 existing CNG stations throughout the South Coast Air Basin. Three of the 17 sites, located at John Wayne Airport, the SuperShuttle headquarters in Anaheim and the Orange County Sanitation District office, did not require funding as originally proposed. A new station was constructed at John Wayne Airport, as opposed to being upgraded, and AQMD funding was not required. SuperShuttle moved their headquarters from the Anaheim site to a new location and installed their fueling station at their own expense. Lastly, the Orange County Sanitation District facility will be upgraded with relatively new equipment from Clean Energy’s existing City of Industry site, as that site is being claimed by the City under eminent domain. As a result, $150,251 remain unused. Staff proposes that $150,251 revert to the Clean Fuels Fund and be used to fund the current solicitation.

Gas Research Institute

At its November 2000 meeting, the Board awarded $35,000 to the Gas Research Institute (GRI) to upgrade the existing LNG station at the UPS Ontario Airport facility. GRI was unable to secure consensus and sufficient funding through the technical partner ALT-USA to perform the upgrade; hence AQMD funds were not utilized. As a result, staff proposes that these funds revert to the Clean Fuels Fund and be used to fund this proposal.

CALSTART/WestStart

At its July 2001 meeting, the Board awarded $10,350 to CalStart to defray the cost of installing a slow-fill CNG station at its headquarters. CALSTART terminated the project as they moved their headquarters and no longer have adequate space to accommodate the station. Staff proposes that these funds revert to the Clean Fuels Fund and be used to fund the current solicitation.

Clean Energy – Administrative Services Co-Op

At its July 2001 meeting, the Board awarded $106,450 to Clean Energy, Inc. to install a new CNG fueling station at the Administrative Services Co-Op in Gardena (a taxicab company servicing LAX). Due to contracting issues between Clean Energy, Inc. and Administrative Services Co-Op, the station was not constructed. As a result, staff proposes that these funds revert to the Clean Fuels Fund and be used to fund the current solicitation.

Pinnacle CNG

At its July 2001 meeting, the Board awarded $230,000 to Pinnacle CNG to install a new CNG fueling station at Ware Disposal in Santa Ana. Due to contracting issues between Pinnacle CNG and Ware Disposal the station was not constructed. As a result, staff proposes that these funds revert to the Clean Fuels Fund and be used to fund the current solicitation.

Praxair, Inc.

At its October 2002 meeting, the Board awarded $750,000 to Praxair, Inc. to offset the costs of purchasing and installing an LNG production facility at the Wilmington air separation facility. With the possible advent of several LNG terminals being installed on the West Coast, Praxair is discontinuing the investment until such time as it can be determined that the LNG terminals shall come to fruition. As a result, staff proposes that these funds revert to the Clean Fuels Fund and be used to fund the current solicitation.

Of the total amount of $1,968,369 requested to be de-obligated, $1,621,5693 would revert back to the Clean Fuels Fund and $346,800 will revert back the AES Settlement Fund. Under separate actions, staff is recommending that 16 of the 26 proposals to construct CNG or LNG refueling stations be funded with the original proposal amount of $1.5 million from the Clean Fuels Fund and $1,242,323 above the original amount of the solicitation from the de-obligated funds from this action. The total funding for the 16 proposals will be recommended for funding at a cost not to exceed $2,742,323 under these separate actions. Of the total amount, $2,395,523 ($1,500,000 from the original solicitation) would be from the Clean Fuels Fund and $346,800 will come from the AES Settlement Fund.

Staff recommends that the Board authorize the re-issuance of the original Request for Proposal (RFP P2004-09) allowing for a solicitation period of two months with a budget of up to $1,726,046 using the de-obligated funds that reverted to the Clean Fuels Fund. Applicants will be encouraged to re-apply to the re-released RFP as well as other future programs funded through the Clean Fuels Fund and other incentive programs such as the California Energy Commission and Mobile Source Air Pollution Review Committee (MSRC) programs.

Benefits to AQMD

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 enable the transition to future hydrogen refueling infrastructure. There are economies of scale from the extensive infrastructure being planned and installed, possibly reducing the cost and making alternative refueling stations more affordable. While having no direct impact on air emission reductions, new CNG 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 air toxic compounds throughout the Basin.

Resource Impacts

As mentioned previously, under separate action, funding in an amount not to exceed $2,742,323 is proposed to fund sixteen proposals. Funding of $1.5 million would be from the Clean Fuels Fund originally allocated by the Board. The remaining $1,242,323 would be from prior year natural gas fueling project awards that staff is requesting the Board to de-obligate. Upon the Board’s approval, $346,800 of the $1,968,369 would be returned to the AES Settlement Fund and $1,621,569 (from Table 2) would be returned to the Clean Fuels Fund.

Table 2. Summary of Awards To Be De-Obligated
 

Fund	Approval Date	Company	Old Amount	New Amount
Clean Fuels	March 2003	Praxair	$750,000	$0
Clean Fuels	March 2003	Cryo Equipment	$137,264	$0
Clean Fuels	March 2003	SunLine	$549,054	$0
Clean Fuels	November 2000	Gas Research Institute	$35,000	$0
Clean Fuels	August 2001	Clean Energy	$892,615	$742,364
AES Settlement	July 2001	CALSTART	$10,350	$0
AES Settlement	July 2001	Pinnacle CNG	$230,000	$0
AES Settlement	July 2001	Clean Energy	$301,250	$88,800

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