City Council
Report
City Council Meeting: May 11, 2021
Agenda Item: 3.B
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To: Mayor and City Council
From: Edward F King, Director, Department of Transportation, Transit Maintenance Subject: Award Bid #4404 and Enter into Agreement with Clean Energy Fuels Corporation for Purchase of Renewable Liquid Natural Gas Recommended Action
Staff recommends that the City Council:
1. Award Bid #4404 to Clean Energy Corporation to provide Renewable Natural Gas fuel for the Santa Monica Department of Transportation.
2. Authorize the City Manager to negotiate and execute an agreement with Clean Energy Fuels Corporation, in an amount not to exceed $5,871,932 over a fiveyear period, which includes a 15% contingency and a 2.5% annual cost escalator, with future year funding contingent on Council budget approval.
Executive Summary
The Santa Monica Department of Transportation (SaMoDoT) is committed to the City of Santa Monica’s sustainability goals through the purchase of zero-emission transit buses and the purchase of the lowest carbon intensity fuel available for its fleet of existing natural gas buses. SaMoDoT’s Big Blue Bus currently has 177 buses powered by clean-burning Renewable Natural Gas (RLNG) harvested and produced in California in its Big Blue Bus (BBB) fleet. Staff recommends the award of Bid #4404 to Clean Energy Fuels Corporation (Clean Energy) and to negotiate and execute an agreement with Clean Energy for the purchase and delivery of Renewable Bio-Liquid Natural Gas for a five-year period in the amount not to exceed of $1,000,005 for the first year with the total five-year contract amount not to exceed $5,871,932 including a 15% contingency and a 2.5% annual cost escalator.
Discussion
Big Blue Bus has begun transitioning its fleet of transit buses to zero-emission vehicles but will continue to operate natural gas buses for a ten-year period at minimum. BBB currently operates 177 natural gas-powered transit buses fueled by Renewable Bio- 2 of 4
Liquid Natural Gas (RLNG). This fuel is 100% domestically produced and is derived from harvested landfill methane.
The use of RLNG significantly reduces harmful greenhouse gas emissions and further reduces the City’s emissions of harmful pollutants. The measure of emissions reduction involves calculating the Low Carbon Fuel Standard (LCFS) credits and greenhouse gas emissions. LCFS promotes the use of greenhouse gas-reducing transportation fuels such as liquid biofuels, renewable natural gas, electricity, and hydrogen through a fuelneutral declining carbon intensity standard, which is administered by the California Air Resources Board. Carbon Intensity (CI) is a measure of the greenhouse gas (GHG) emissions associated with the production, distribution, and consumption of transportation fuels. In order to achieve the GHG reductions at the lowest cost and in the most consumer-responsive manner, the LCFS uses a market-based credit trading system to allow providers to choose how they reduce emissions while responding to consumer demand.
The award of Bid #4404 to Clean Energy would enable the continued use of RLNG to power the City’s fleet of natural gas transit buses and other City vehicles. It also provides the City a share of the LCFS credits from the producer, Clean Energy, as a fixed discount on a per-gallon basis. Clean Energy has provided this service since 2011 with exceptional service meeting all City specifications.
The Environmental Protection Agency sets the Carbon Intensity for each fuel type. The RLNG that BBB uses to power its fleet of natural gas buses has a CI value of 44.31 grams of carbon dioxide equivalent per megajoule (gCO2e/MJ) compared to 95.00 for fossil natural gas resulting in an estimated GHG emissions reduction of 11,945 metric tons. Staff recommends the continued use of RLNG as fuel in its fleet of transit buses to minimize BBB’s emissions during its transition to zero-emission buses.
Renewable Bio-Liquefied Natural Gas is non-fracked methane harvested from organic waste in landfills. The process of harvesting and processing RLNG provides a product that has fewer impurities than conventional natural gas and is a cleaner burning fuel 3 of 4
source. Historically, this gas has been burned off into the atmosphere, but can now be harvested for use as fuel. The gas is collected from landfills and put through a filtration and refining process that removes impurities that are found in conventional natural gas creating a cleaner burning fuel. Operating transit buses on this waste-to-energy source contributes to BBB’s commitment to protecting the environment by using the cleanest transportation fuels available.
Vendor/Consultant Selection
Bidder Recommendation
Best Bidder Clean Energy Fuels
Evaluation Criteria
price, carbon intensity of fuel, quality of fuel provided, capacity to provide sufficient quantity of fuel in a timely manner, compliance with City specification and scope of work
Municipal Code SMMC 2.24.180
Submittals Received
Clean Energy $5,796,855 Element Markets No Bid
Applied LNG Technologies, LLC No Bid
Bid Data
Date
Posted Posted On
Advertised in
(City Charter & SMMC)
Vendors
Downloaded
Date Publicly
Opened
2/3/2021
City’s
online
vendor
portal
Santa Monica Daily
Press 11 2/23/2021
Best Bidder Justification
Bids were evaluated based on the criteria in SMMC 2.24.180 including price, experience, ability to deliver fuel timely and in quantities required, quality of fuel in both purity and carbon intensity, and ability to comply with City specifications.
Clean Energy can provide Renewable Liquefied Natural Gas (RLNG) that meets all City requirements for Methane purity and delivery temperature. Clean Energy’s bid also provides revenue sharing from LCFS credits on a fixed basis that will lower transit bus fuel costs while minimizing any impacts of volatility in the LCFS credit market. Because Clean Energy is the incumbent bidder, staff compared the pricing in its bid submittal to the City’s current contract for RLNG and found the bid price to be lower than the City’s current contract price. Additionally, all other bidders provided a no-bid response. No-bid responses were submitted by bidders who reviewed the bid specifications, but chose not to submit a bid. One bidder cited unacceptable contract terms and the other did not state the reason for 4 of 4
submitting a no-bid response. Based on the price, ability to provide RLNG fuel that meets the City’s specifications, ability to provide a share of LCFS credit revenue, and positive history with the bidder’s services, Clean Energy is recommended as the best bidder.
Financial Impacts and Budget Actions
Staff seeks authority to approve funding from the BBB enterprise fund to award a contract with Clean Energy Fuels to provide Renewable Liquefied Natural Gas fuel for the City’s fleet of transit buses.
Contract/Agreement Request
FY 2021-22 Budget Department/CIP Account
#
Total Contract Amount
Request Amount
$924,928 60600013.521841 $5,871,932
Prepared By: David Nanjo, Administrative Analyst
Approved Forwarded to Council