TO: Honorable City Council
FROM: City Manager
SUBJECT: A Resolution of the City Council of the City of Commerce, California, Approving the Fourth Amendment to the Professional Service Agreement between the City of Commerce and Clean Energy Fuels.
MEETING DATE: September 9, 2025
RECOMMENDATION
Approve the Fourth Amendment to the Professional Service Agreement between the City of Commerce and Clean Energy Fuels for fuel supply, operations, and maintenance of the City’s LNG/CNG public fueling station.
BACKGROUND
On April 7, 2020, the City Council approved a Third Amendment Agreement with Clean Energy for the fuel supply, operations, and maintenance of the City’s LNG/LCNG public fueling station. As part of its ongoing effort to eliminate greenhouse gas emissions, the City plans to continue using CNG fuel for its transit fleet until it transitions into electric buses. Additionally, sell LNG/CNG at the City’s fueling station and receive eligible Federal and State of California credits for using green energy.
City staff recommend continuing to utilize Clean Energy (CE) to provide fuel supply, operations, and maintenance of the City’s fueling station. Since its inception in 1996, CE has fueled over 9,000 transit vehicles with approximately 90 million gallons of CNG annually, and its California customers include LA Metro, City of Simi Valley, Foothill Transit, Long Beach Transit, Santa Monica Big Blue Bus, and Gold Coast Transit.
ANALYSIS
The primary benefits of Liquefied Natural Gas (LNG) and Compressed Natural Gas (CNG) are their environmental advantages and cost savings compared to traditional fuels. Both reduce emissions of greenhouse gases, nitrogen oxides, and particulate matter. LNG and CNG also offer lower operating and maintenance costs, contribute to energy security, and provide noise reduction. The choice between LNG and CNG depends on the application, as LNG offers greater density for long-range vehicles while CNG is suitable for a broader range of vehicles, though it requires larger storage tanks.
FISCAL IMPACT
The City of Commerce Transit primarily uses CNG fuel for its fleet. In addition, the City receives royalty revenue from the sale of CNG and LNG fuel to external (non-transit) customers. The City currently receives $0.40 per Gasoline-Gallon-Equivalent (GGE) sold to external users.
Based on historical sales data, the City is projected to receive the following revenues:
Fiscal Year Royalty Revenue Amount
2026 .40 $2,300,000
2027 .40 $2,000,000
2028 .40 $2,000,000
Total $6,300,000
Actual revenues may vary depending on fuel demand and usage levels. Clean Energy will continue to manage all regulatory compliance, reporting, and administrative requirements associated with these revenues on behalf of the City.
RELATIONSHIP TO STRATEGIC GOALS
This agenda item relates to the 2016 strategic planning goal of “review and update services and activities to increase efficiency,” as the proposed recommendation outlined in this report assists in mitigating the City’s transportation operating costs.
ALTERNATIVES:
Approve staff's recommendation.
Reject staff's recommendation.
Provide staff with alternate or further direction.
Prepared and recommended by: Claude McFerguson, Director of Transportation Fiscal impact reviewed by: Alvaro Castellon, Director of Finance Approved as to form: Noel Tapia, City Attorney
Attachments:
Resolution
Clean Energy Agreement – Amendment #4
CITY OF COMMERCE
AGENDA REPORT
Item No.