Purchase Order for CNG Fuel
June 4, 2024
DATE: June 4, 2024
TO: Honorable Mayor and City Council
FROM: Paul Cranmer, Public Works Services Director
By: Daniel Vargas, Management Analyst
SUBJECT: PURCHASE ORDER WITH CLEAN ENERGY FOR THE PURCHASE OF COMPRESSED NATURAL GAS (“CNG”) FUEL FOR THE CITY’S FLEET IN AN AMOUNT NOT TO EXCEED $150,000
CEQA: Not a Project
Recommendation: Approve
SUMMARY
The City primarily utilizes the Compressed Natural Gas (“CNG”) fueling station located at the Foothill Transit Center, operated by Clean Energy, to fuel its CNG vehicles. The Purchase Order with Clean Energy expires on June 30, 2024. It is recommended that the City Council approve a sole source Purchase Order with Clean Energy for the purchase of CNG fuel for the City’s fleet, in an amount not to exceed $150,000 for Fiscal Year 2024-
25. BACKGROUND
The Public Works Services Department (“PWSD”) has been strategically replacing vehicles that meet the City’s Vehicle Replacement Policy criteria with alternative fuel vehicles such as CNG, Hybrids, and Electric vehicles. This approach has allowed the City to be compliant with the Air Quality Management District’s mandates that heavy duty equipment be replaced with alternative fuel vehicles, as well as reducing Arcadia’s overall fuel costs and greenhouse gas emissions. The PWSD is responsible for the purchase of CNG fuel and currently operates a fleet of 15 heavy-duty CNG vehicles, which includes three street sweepers, one aerial lift truck, two dump trucks, one water tanker truck, two sewer jetter vacuum trucks, one hydro-excavator truck, and five one-ton pickup trucks.
DISCUSSION
The PWSD utilizes two local CNG public fueling stations to fuel all City CNG vehicles.
The first station, owned by Foothill Transit, is located less than one-half mile from the Public Works Service Center. The second station, owned by the City of Pasadena, is located on Foothill Boulevard, west of City limits. Clean Energy is the sole source of CNG fuel and the service provider for both of these fueling stations. There are no other viable
Purchase Order for CNG Fuel
June 4, 2024
CNG fueling stations in the immediate area. Therefore, utilizing a sole source purchase order is necessary.
The PWSD has vehicle fueling cards provided by Clean Energy and is invoiced monthly for fuel purchased at these two stations. It is estimated that the PWSD will use approximately 27,800 Gasoline Gallon Equivalents (“GGE”) of CNG by the end of Fiscal Year 2023-24. This usage reflects a 9.41% increase from the previous fiscal year. Based on month-to-month changes in CNG usage during Fiscal Year 2023-24, a 6% annual increase is projected for Fiscal Year 2024-25. The total expected usage of CNG for Fiscal Year 2024-25 is 29,475 GGEs.
Although CNG fuel prices are typically less volatile than other fuels, the price per GGE of CNG has increased steadily in recent years. During FY 2023-24, the City paid on average $5.08 per GGE, which includes state fuel tax fees, as compared to $5.51 in FY 2022-23, and $4.35 in FY 2021-22. The cost of CNG fuel is expected to decrease in FY 2024-25, as seen in recent monthly transactions; however, price spikes can occur and are not uncommon. It is recommended that the Fiscal Year 2024-25 Purchase Order reflect the estimated average cost of $5.08 per GGE for the expected 29,475 GGEs of CNG. Given that, at least $149,733 will be needed to cover the expected costs.
ENVIRONMENTAL ANALYSIS
The proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”), as it can be seen with certainty that it will have no impact on the environment.
FISCAL IMPACT
The request is to purchase CNG fuel for the City’s fleet in an amount not to exceed $150,000. Sufficient funds will be appropriated in the Department’s proposed Fiscal Year 2024-25 Operating Budget for the purchase of CNG fuel.
RECOMMENDATION
It is recommended that the City Council determine that this action does not constitute a project under the California Environmental Quality Act (“CEQA”); and approve a Purchase Order with Clean Energy for the purchase of Compressed Natural Gas (“CNG”) fuel for the City’s fleet, in an amount not to exceed $150,000.