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In our regular meeting, our first item, we have one consent

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item on the consent agenda.

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Is there any member who'd like to have that pool for

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individual consideration?

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I have a question on that.

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Okay.

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Alright. So we'll just go right into item number A, which

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is consider recommending approval of a contract with Lerit,

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Inc.

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out of Cochman, Texas for the construction of the initial

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phase of the Hickory substation underground transmission

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and distribution line

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in an amount not to exceed $892,455.

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Okay. Barbie, any questions?

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I just wondered if we had any other responders to the

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proposal?

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Chuck Sears is going to...

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There were a total of six companies represented at the pre-

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proposal or pre-bid meeting equivalent.

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We had one respondent indicate they just didn't have time

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to do the job, and past that we just had no other

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respondents. That was the only one.

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Okay. Thank you.

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Yes, sir.

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Move approval.

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I have a motion to approve.

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Second.

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Second. Any further discussion?

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No. All in favor say aye.

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Aye.

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Any opposed? Same sign.

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Okay. Item A passes.

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Next we have consider approval of the public utility board

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meeting minutes of July the 10th.

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I did have one just clarification on those.

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I think I made a comment about CNG. It's listed as CNG.

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It's my accent. I know.

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All the words run together.

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But that's on line 28 on the first page.

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I would like to amend that I was not here. It says I was

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present. I was not present.

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I made up for that since I was here and not here. I'm

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already addressing it.

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Okay.

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So with those couple of changes, any other modifications to

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that?

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Hearing none, then those will be with those changes, those

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minutes will be approved as we make those couple changes

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there.

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Item B is to consider recommending approval of the electric

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rate ordinance for fiscal year 17-18.

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Good morning, board. I'm Jessica Rogers. I'm the energy

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services manager at Denton Municipal Electric.

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And you've already got to hear my spiel once on this, so I

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promise to keep it very short.

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I would just like to point out one minor change that we had

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since my last presentation,

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and that was in the language that was in the special

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facilities writer.

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Mr. Colster and I had met and we wanted to clarify some

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things in this writer.

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And so what you'll see is that we removed section two, and

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then that was related specifically to some billing language

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that is actually covered in section one.

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So it was just redundant. And then we added parts A and B

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where we clarified on sort of the track that those writers

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will take, depending on the value of those agreements.

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And so that's what it will look like once it's all cleaned

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up and we don't have all those strikethroughs in there.

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But I'm happy to answer any questions about that writer.

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And if not, I'll take you right back to just our brief

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recap slide.

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We're still recommending the 1% decrease, and we'll have

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that slight increase in the TCRF with a reduced ECA rate.

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But other than that, I don't have any additional slides,

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but I'm happy to answer any questions that you might have.

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Questions? I think we've seen this a couple times.

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I know we had some questions last time about what type of

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examples of businesses in each category, and I think we did

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that.

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And we included that for you, Mr. Russell.

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Yeah, very good. Kind of brings it into focus a little bit.

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Yes.

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Okay. Questions?

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Is there a motion to approve the electric rate ordinance as

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presented?

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I'll move approval.

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I second.

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Motion and second. Any other discussion?

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All in favor say aye.

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Aye.

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Any opposed? Same sign.

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Okay, thank you.

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Thank you.

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Next we have to consider recommending approval of the water

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, wastewater, and miscellaneous fees ordinances for '17-'18.

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Good morning, board members.

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The water utilities and wastewater utilities have a few

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minor changes that were made from last time.

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Just a quick recap on these rates and fees.

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Residential and commercial rates are going to remain

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unchanged from the prior year for water.

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The water tap and meter fee is an issue that we've been

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conversing with the council about.

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And you did approve changes on May 22nd of 2017.

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We actually presented this information to the city council

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on July 18 of 2017 and received direction to make a small

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wording change

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that was adjacent to the water line tap fee to clarify the

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tax.

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So that is reflected in the red line version of your backup

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.

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And we are making the same change that DME had suggested

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earlier with the special condition and special facilities

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rider.

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Require city manager approval for expenditures less than $

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100,000 and PUB and council approval for those over $100,000

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.

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Just real quickly, I want to remind everyone that we are

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making adjustments to the wholesale rate.

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The wholesale rate for WW2 is going up by 3%.

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The raw water rate is going to be adjusted by the whatever

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Dallas water utility rate is.

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We are contritionally obligated to provide that at 85% of

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the Dallas water rate.

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And the wholesale raw water pass through the WCL rate is

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going to be CPI adjusted as per contract requirements.

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That is pretty much it for the water.

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I'd be happy to answer any questions on that or we can move

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directly into the wastewater.

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Questions?

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On the wastewater side, very quickly residential and

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commercial rates remain unchanged from last year.

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We talked last time about selling our Dino Dart Overs

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product.

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Basically this is a waste product for us.

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We're selling it at a little bit above what our cost is to

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actually transport this to where we're storing it.

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We revised our collection and transportation services, our

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SWP fee schedule to base the fees on the cost of service

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and remove some of the customer categories that were there.

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And then we're making that same change to the special

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condition and special facilities rider where we're putting

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the approval levels for less than $100,000 and greater than

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$100,000.

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So I'll be happy to answer anything on wastewater.

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Yes?

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On the Dino Dart Over, describe that to me and what people

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would use it for.

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Well, we have a vendor that is coming to get it.

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Typically they're going to be too large to make a good mul

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ch product.

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And we basically are just -- they're a product that is

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collected from our screening operation.

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And so we have about a 3/8 inch size screen that that

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material goes through after it grinds.

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And anything that comes off of that screen is considered to

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be an over.

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And we basically just go and store it.

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And we've used it for a few very limited applications on

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the landfill site.

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But right now we have a very large pile of it.

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We have a single vendor that approached us that wanted --

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was interested in buying it.

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I honestly don't know what they're going to use it for.

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I imagine they're going to use it as some form of an

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amendment.

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They may decide to grind it again.

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I'm not really sure.

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But it's just a single individual right now that asked us

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to provide a rate for that waste product.

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It's nice to be able to sell something you don't want or

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cost you to store.

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Yes, the pile is getting very large.

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And we're very happy to see that going away.

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Questions?

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Okay.

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Yes, Laney's fees, deposits, building, billings and

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procedures for administrative services is a pretty easy one

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.

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No changes.

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So I am asking for a recommendation of approval for these

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rate ordinances.

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I'd be happy to answer any other questions.

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Okay.

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Questions?

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Do we have a motion then to approve the water, wastewater

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and miscellaneous fee ordinances for '17-'18?

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So moved.

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Second.

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Motion and second.

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Any discussion?

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I do like the change for the under $100,000, over $100,000.

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I think that's a very appropriate change.

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All in favor say aye.

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Aye.

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Any opposed?

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Same sign.

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Okay.

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Motion passes.

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Item number or item D is to consider recommending approval

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for the solid waste and recycling rate ordinances for

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fiscal year '17-'18.

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These rates and fee schedules have not changed from what

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was presented to you on July 10th.

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I'll go through really quickly.

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All rates and fees remain unchanged from the prior year.

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The change that we did make was remove the reference to the

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general manager of solid waste and replace with director of

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solid waste.

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And we added some text to the special waste category to

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clarify that the charges derived for those collection and

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disposal of special waste fees would be based on cost of

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service.

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And those are the only changes that we have made to this

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particular rate and fee schedule.

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So I'd be happy to answer any questions on that.

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No?

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00:11:26,500 --> 00:11:27,500
Okay.

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Motion?

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00:11:28,500 --> 00:11:29,500
Move approval.

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Second.

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And a second from Barbara.

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Any discussion?

225
00:11:34,500 --> 00:11:35,500
All in favor say aye.

226
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Aye.

227
00:11:36,500 --> 00:11:37,500
Any opposed?

228
00:11:37,500 --> 00:11:39,500
Same sign.

229
00:11:39,500 --> 00:11:41,500
Okay.

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00:11:41,500 --> 00:11:45,500
ACM update.

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00:11:45,500 --> 00:11:49,750
Board members, in your packet you will see a summarization

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there of the utility rate summary.

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And if you have any questions, we'll be happy to answer

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that, but as presented earlier, there will be a slight

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decrease in electric rates and no changes on the water,

236
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wastewater, and solid waste rates for residents for the

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next fiscal year.

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Okay.

239
00:12:13,500 --> 00:12:15,500
Any questions on that item?

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Question on this.

241
00:12:17,500 --> 00:12:22,500
We show water at 9,200 gallons a month and waste at six.

242
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We actually build that on 100%.

243
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The wastewater is -- or is that the minimum we're looking

244
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at?

245
00:12:38,500 --> 00:12:42,269
On the wastewater side, on commercial, we're going to be

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building it at 95% if they're not individually metered for

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irrigation.

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On the residential side, we're going to be basing it on 100

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% of the winter average.

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Oh, winter average.

251
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Okay.

252
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Gotcha.

253
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So that kind of explains the difference of an average bill.

254
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Okay.

255
00:13:00,500 --> 00:13:01,500
All right.

256
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That's the only question I had.

257
00:13:04,500 --> 00:13:10,399
Okay. And the next two items will be presented by Deputy

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00:13:10,399 --> 00:13:12,470
City Manager Brian Langley and the Solid Waste Financial

259
00:13:12,470 --> 00:13:14,710
Internal Control Review and the Energy Management Organiz

260
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ational Financial Review by Deloitte.

261
00:13:16,500 --> 00:13:17,500
Okay. Good morning.

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I wanted to mention a couple of things that we're

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00:13:19,779 --> 00:13:22,240
proceeding with, really under the city manager's

264
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expenditure authority, but we wanted to make you aware of

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it.

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One is related to solid waste, and as you know, we've been

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looking at all of our operations to improve efficiency and

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effectiveness, and some of the things we've been coming

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across with solid waste we thought could be improved, and

270
00:13:37,090 --> 00:13:39,399
so we wanted to spend some time with an outside firm coming

271
00:13:39,399 --> 00:13:40,500
in to help us to do that.

272
00:13:40,500 --> 00:13:43,500
And in particular, they're going to be helping us look at

273
00:13:43,500 --> 00:13:46,799
revenue processing and billing, the purchasing and expense

274
00:13:46,799 --> 00:13:50,190
processing and authorization, that process, how that's done

275
00:13:50,190 --> 00:13:53,809
, and how contracts are executed and managed over a period

276
00:13:53,809 --> 00:13:54,500
of time.

277
00:13:54,500 --> 00:13:57,299
Those are things, again, that we think we can improve with

278
00:13:57,299 --> 00:13:59,909
in solid waste, and so we've asked the accounting firm of

279
00:13:59,909 --> 00:14:01,500
Weaver to come in and do that.

280
00:14:01,500 --> 00:14:03,799
We've worked with them many times in the past and have

281
00:14:03,799 --> 00:14:06,210
always done a very good job, and as we work through that

282
00:14:06,210 --> 00:14:08,710
process and get those results, we'll come back to the PUB

283
00:14:08,710 --> 00:14:11,240
and council and let you guys know the improvements that we

284
00:14:11,240 --> 00:14:12,500
're putting in place.

285
00:14:12,500 --> 00:14:17,019
And kind of in that same vein, we're working with Deloitte

286
00:14:17,019 --> 00:14:21,570
to help us validate some of the savings associated with the

287
00:14:21,570 --> 00:14:25,889
energy management organization and the DME. As you know, we

288
00:14:25,889 --> 00:14:27,500
have our own operation out there buying and selling energy.

289
00:14:27,500 --> 00:14:30,149
We think this has been very successful. Some of our own

290
00:14:30,149 --> 00:14:32,870
estimates estimate that we've saved about $13 million

291
00:14:32,870 --> 00:14:35,389
annually with that operation, but we'd like to have an

292
00:14:35,389 --> 00:14:38,139
outside firm come in, validate those numbers, validate the

293
00:14:38,139 --> 00:14:41,500
model used to calculate that, and so we'll be working with

294
00:14:41,500 --> 00:14:41,500
Deloitte over the next few weeks to do that.

295
00:14:41,500 --> 00:14:44,100
And again, bringing that back to the PUB and council to

296
00:14:44,100 --> 00:14:45,500
talk about that process.

297
00:14:45,500 --> 00:14:48,659
With Deloitte, an additional scope of the work would be

298
00:14:48,659 --> 00:14:51,820
also to, depending on how it goes for the past two fiscal

299
00:14:51,820 --> 00:14:54,990
years, would then be to engage them to have a model going

300
00:14:54,990 --> 00:14:58,649
forward for '17-'18 going forward that we can all agree

301
00:14:58,649 --> 00:15:00,500
upon and understand.

302
00:15:00,500 --> 00:15:04,259
So those are my two items, and I'd be happy to answer any

303
00:15:04,259 --> 00:15:06,500
questions that you may have.

304
00:15:06,500 --> 00:15:07,500
All right. Thank you, sir.

305
00:15:07,500 --> 00:15:08,500
Oh, we've got a question.

306
00:15:08,500 --> 00:15:13,200
I do have a couple questions. How were these organizations

307
00:15:13,200 --> 00:15:15,500
selected to do these services for us?

308
00:15:15,500 --> 00:15:19,049
Weaver is, in the case of Weaver, they're a firm that used

309
00:15:19,049 --> 00:15:22,330
to be our audit firm. We switched to a different firm in

310
00:15:22,330 --> 00:15:24,990
the last year or so, so we have a lot of experience with

311
00:15:24,990 --> 00:15:27,460
that firm, and in particular with a partner over the risk

312
00:15:27,460 --> 00:15:28,500
advisory services.

313
00:15:28,500 --> 00:15:31,340
I've used them many times in the past to help us with some

314
00:15:31,340 --> 00:15:33,830
internal audit type work, and so we have a lot of

315
00:15:33,830 --> 00:15:35,500
experience with that firm.

316
00:15:35,500 --> 00:15:39,850
For Deloitte, we looked at several different firms in that

317
00:15:39,850 --> 00:15:42,970
business and space of firms that have experience in that

318
00:15:42,970 --> 00:15:45,299
area and the technical knowledge to actually make those

319
00:15:45,299 --> 00:15:46,500
kinds of calculations.

320
00:15:46,500 --> 00:15:48,500
In Deloitte, in our opinion, really was the best fit.

321
00:15:48,500 --> 00:15:51,500
And when you say "we" and "are," who were you?

322
00:15:51,500 --> 00:15:53,500
The city manager and I and our staff.

323
00:15:53,500 --> 00:15:54,500
Yes, sir.

324
00:15:54,500 --> 00:15:55,500
Thank you.

325
00:15:55,500 --> 00:15:56,500
You're welcome.

326
00:15:56,500 --> 00:15:57,500
Okay.

327
00:15:57,500 --> 00:15:58,500
All right. Thank you.

328
00:15:58,500 --> 00:15:59,500
Thank you, Brian.

329
00:15:59,500 --> 00:16:01,500
You're welcome.

330
00:16:01,500 --> 00:16:06,080
And then on the new business matrix, there's nothing to

331
00:16:06,080 --> 00:16:10,759
report, nothing to update the board on, unless you have

332
00:16:10,759 --> 00:16:13,500
items that you'd like to add.

333
00:16:13,500 --> 00:16:15,500
Oh, yes, Barbara.

334
00:16:15,500 --> 00:16:21,409
I know that we've got the staging area on Loop 288 is going

335
00:16:21,409 --> 00:16:26,960
away. Are we moving to another site now to be more geograph

336
00:16:26,960 --> 00:16:32,500
ically located toward the work that's going to be done?

337
00:16:32,500 --> 00:16:38,120
I don't know at this point. Let me check and get back to

338
00:16:38,120 --> 00:16:40,500
the board.

339
00:16:40,500 --> 00:16:45,500
You're talking about the substation construction site?

340
00:16:45,500 --> 00:16:53,500
Yeah, the staging area where they piled all their stuff.

341
00:16:53,500 --> 00:17:00,220
Hearing nothing else then, that's all we have for the ACM

342
00:17:00,220 --> 00:17:01,500
update.

343
00:17:01,500 --> 00:17:06,829
Our next part of the meeting is a work session where we

344
00:17:06,829 --> 00:17:11,750
will receive a report, hold a discussion, and provide a

345
00:17:11,750 --> 00:17:17,750
recommendation regarding compressed natural gas, CNG, fuel

346
00:17:17,750 --> 00:17:20,970
ing facility at the intersection of Mayhill Road and Spitzer

347
00:17:20,970 --> 00:17:21,500
Road.

348
00:17:21,500 --> 00:17:24,569
Good morning. My name is Ethan Cox. I'm the director of

349
00:17:24,569 --> 00:17:25,500
solid waste.

350
00:17:25,500 --> 00:17:27,500
Pleasure to bring this item to you this morning.

351
00:17:27,500 --> 00:17:30,099
So I have a brief presentation to kind of give you an

352
00:17:30,099 --> 00:17:32,829
update on where solid waste is with our CNG fueling

353
00:17:32,829 --> 00:17:36,759
facility, as well as try to seek some direction on how the

354
00:17:36,759 --> 00:17:40,549
board would prefer that we pursue our options moving

355
00:17:40,549 --> 00:17:41,500
forward.

356
00:17:41,500 --> 00:17:45,569
So I'm not sure how well versed everyone is in our history

357
00:17:45,569 --> 00:17:46,500
with CNG.

358
00:17:46,500 --> 00:17:49,490
So compressed natural gas is an alternative fueling

359
00:17:49,490 --> 00:17:52,680
platform that you can certainly implement on any type of

360
00:17:52,680 --> 00:17:53,500
vehicle.

361
00:17:53,500 --> 00:17:56,799
It comes in handy whenever fuel prices get a little bit out

362
00:17:56,799 --> 00:17:59,750
of hand because CNG traditionally has been a little bit

363
00:17:59,750 --> 00:18:02,599
lower on a per gallon basis than say diesel or regular

364
00:18:02,599 --> 00:18:03,500
gasoline.

365
00:18:03,500 --> 00:18:06,099
That was certainly the case back in 2012. That was the

366
00:18:06,099 --> 00:18:08,859
first report to the Public Utilities Board and the City

367
00:18:08,859 --> 00:18:10,500
Council by solid waste staff.

368
00:18:10,500 --> 00:18:14,670
Those talks intensified in the summer of 2013 and staff

369
00:18:14,670 --> 00:18:18,369
received direction from both the PUB and the City Council

370
00:18:18,369 --> 00:18:21,759
to go ahead and start pursuing public sales as well as

371
00:18:21,759 --> 00:18:24,500
changing our fleet over to CNG vehicles.

372
00:18:24,500 --> 00:18:27,829
Around that fall, solid waste staff actually went and

373
00:18:27,829 --> 00:18:31,220
negotiated with the firm to implement a CNG fueling station

374
00:18:31,220 --> 00:18:31,500
.

375
00:18:31,500 --> 00:18:34,500
Unfortunately, those talks fell apart shortly thereafter.

376
00:18:34,500 --> 00:18:38,940
And in the spring of 2014, April 2014, the department

377
00:18:38,940 --> 00:18:42,500
entered into a temporary fueling contract for mobile CNG

378
00:18:42,500 --> 00:18:46,180
fueling with the firm called Ultimate CNG or UCNG as you

379
00:18:46,180 --> 00:18:47,500
see on the slide.

380
00:18:47,500 --> 00:18:49,640
That initial contract was for a period of three years. It

381
00:18:49,640 --> 00:18:52,829
was kind of a holdover until we got the facility

382
00:18:52,829 --> 00:18:53,500
constructed.

383
00:18:53,500 --> 00:18:57,619
However, because project has not come along, I think the

384
00:18:57,619 --> 00:18:59,500
way staff saw it would.

385
00:18:59,500 --> 00:19:02,549
We've had to do two separate amendments for UCNG. So what

386
00:19:02,549 --> 00:19:05,250
started out as a hundred and twenty thousand dollar

387
00:19:05,250 --> 00:19:08,200
contract over a three year period has now ballooned up to

388
00:19:08,200 --> 00:19:10,500
about one point nine million dollars.

389
00:19:10,500 --> 00:19:13,900
So where we stand today, August 2016, the Public Utilities

390
00:19:13,900 --> 00:19:17,109
Board and also the City Council, asked was received a

391
00:19:17,109 --> 00:19:21,180
presentation from the Solid Waste Department and we awarded

392
00:19:21,180 --> 00:19:24,519
a contract to Zide Energy for the construction of the fuel

393
00:19:24,519 --> 00:19:25,500
ing station.

394
00:19:25,500 --> 00:19:28,099
That project is moving forward. What we wanted to do today

395
00:19:28,099 --> 00:19:30,359
is get in front of you and share some of the financial

396
00:19:30,359 --> 00:19:32,500
information that we've evaluated on this.

397
00:19:32,500 --> 00:19:36,730
We really have some decisions to make on how that station

398
00:19:36,730 --> 00:19:40,779
is going to be set up and how we're going to proceed from

399
00:19:40,779 --> 00:19:41,500
here.

400
00:19:41,500 --> 00:19:44,650
After the award design, the Solid Waste Department also

401
00:19:44,650 --> 00:19:47,769
applied for a six hundred thousand dollar grant from the

402
00:19:47,769 --> 00:19:50,500
Texas Commission on Environmental Quality.

403
00:19:50,500 --> 00:19:53,210
We received that grant that was essentially for the

404
00:19:53,210 --> 00:19:56,500
purchase of equipment to go into the CNG fueling facility.

405
00:19:56,500 --> 00:19:58,500
That did come with some stipulations, though.

406
00:19:58,500 --> 00:20:01,390
It required that the Solid Waste Department make public

407
00:20:01,390 --> 00:20:04,500
sales available for a period of no less than three years.

408
00:20:04,500 --> 00:20:07,299
And we say public sales. That's not contracting on an

409
00:20:07,299 --> 00:20:11,500
individual basis. That is full public sales.

410
00:20:11,500 --> 00:20:14,829
With that, there's also requirements for when the public

411
00:20:14,829 --> 00:20:16,500
can access that facility.

412
00:20:16,500 --> 00:20:18,849
It has to be no less than Monday through Friday at a

413
00:20:18,849 --> 00:20:20,500
minimum of eight hours a day.

414
00:20:20,500 --> 00:20:23,200
We can always go more than that if we wanted to, but we

415
00:20:23,200 --> 00:20:26,170
have to make sure that we at least have that available then

416
00:20:26,170 --> 00:20:26,500
.

417
00:20:26,500 --> 00:20:29,829
Somewhat in our favor, we don't have to have someone

418
00:20:29,829 --> 00:20:32,500
staffing that as a gas station attendant.

419
00:20:32,500 --> 00:20:34,950
We do have some pumps that come equipped with credit card

420
00:20:34,950 --> 00:20:38,880
readers. And so that does have some operational advantages

421
00:20:38,880 --> 00:20:39,500
to us.

422
00:20:39,500 --> 00:20:43,359
But I'll go through later in the presentation some of the

423
00:20:43,359 --> 00:20:46,500
challenges we see with with public sales.

424
00:20:46,500 --> 00:20:49,829
So what's happened since 2012 whenever this item was

425
00:20:49,829 --> 00:20:52,500
initially pitched to the P.B. and council?

426
00:20:52,500 --> 00:20:55,849
Well, obviously, all of us felt that the pump see probably

427
00:20:55,849 --> 00:20:59,160
seen a slight difference in gas prices between now and then

428
00:20:59,160 --> 00:20:59,500
.

429
00:20:59,500 --> 00:21:02,900
So in 2012, diesel was running about three dollars and

430
00:21:02,900 --> 00:21:06,009
seventy cents per gallon. CNG was at two dollars and twelve

431
00:21:06,009 --> 00:21:06,500
cents.

432
00:21:06,500 --> 00:21:08,819
There's about a dollar fifty eight cents per gallon

433
00:21:08,819 --> 00:21:11,250
difference between those two at the time that this was

434
00:21:11,250 --> 00:21:12,500
initially conceived.

435
00:21:12,500 --> 00:21:17,059
Fast forward to this last April. These are spot prices in

436
00:21:17,059 --> 00:21:21,069
that margin to shrink down to about twelve cents per gallon

437
00:21:21,069 --> 00:21:22,500
between CNG and diesel.

438
00:21:22,500 --> 00:21:26,130
And so there's very little cost advantage to running a CNG

439
00:21:26,130 --> 00:21:28,500
vehicle versus a diesel vehicle.

440
00:21:28,500 --> 00:21:32,849
The curious thing around this change in price is that the

441
00:21:32,849 --> 00:21:37,349
operation continued despite the changes in fuel prices to

442
00:21:37,349 --> 00:21:39,500
invest in CNG vehicles.

443
00:21:39,500 --> 00:21:43,049
We had about five to eight CNG vehicles in 2013. We have

444
00:21:43,049 --> 00:21:44,500
twenty four now.

445
00:21:44,500 --> 00:21:48,049
The cost to upgrade a CNG vehicle runs about forty thousand

446
00:21:48,049 --> 00:21:49,500
dollars on average.

447
00:21:49,500 --> 00:21:53,069
And so that's essentially the amount of money that you've

448
00:21:53,069 --> 00:21:56,710
got to recover from the difference in price between CNG and

449
00:21:56,710 --> 00:21:57,500
diesel.

450
00:21:57,500 --> 00:22:00,299
Another challenging thing that we've encountered over the

451
00:22:00,299 --> 00:22:02,829
last four years is again, we don't have our fueling

452
00:22:02,829 --> 00:22:03,500
facility built.

453
00:22:03,500 --> 00:22:07,069
And so the department has been contracted with Ultimate CNG

454
00:22:07,069 --> 00:22:08,500
for mobile fueling.

455
00:22:08,500 --> 00:22:11,299
The price per gallon using that fueling method is about

456
00:22:11,299 --> 00:22:14,500
three dollars and seventy five cents per gallon on average.

457
00:22:14,500 --> 00:22:17,359
And so that's far and above any of the fuel prices that we

458
00:22:17,359 --> 00:22:19,500
've seen in the last five to six years.

459
00:22:19,500 --> 00:22:23,640
Diesel or CNG. In addition, that six hundred thousand

460
00:22:23,640 --> 00:22:25,990
dollar grant, about two hundred one thousand dollars of

461
00:22:25,990 --> 00:22:26,500
that has been expended.

462
00:22:26,500 --> 00:22:30,240
We have equipment on the ground now, fuel pumps, things of

463
00:22:30,240 --> 00:22:32,500
that nature that are ready to go.

464
00:22:32,500 --> 00:22:35,309
But again, we're going to be coming back to the city

465
00:22:35,309 --> 00:22:38,650
council and the P.U.B. with some purchasing type items for

466
00:22:38,650 --> 00:22:41,500
gas transportation and the installation of a fuel line.

467
00:22:41,500 --> 00:22:45,089
We wanted to have this discussion with you before we start

468
00:22:45,089 --> 00:22:47,500
pushing forward with those items.

469
00:22:47,500 --> 00:22:49,500
So I had a slide that you don't have in your backup here.

470
00:22:49,500 --> 00:22:51,500
Hopefully you can see this.

471
00:22:51,500 --> 00:22:54,829
There's a website called CNG one that allows you to do kind

472
00:22:54,829 --> 00:22:57,960
of some quick and dirty analysis on what my payback period

473
00:22:57,960 --> 00:22:58,500
is.

474
00:22:58,500 --> 00:23:01,500
I'm contemplating a CNG vehicle.

475
00:23:01,500 --> 00:23:04,500
So I'll walk you through what this looked like in 2012 and

476
00:23:04,500 --> 00:23:06,890
I'll walk you through what it looks like with today's

477
00:23:06,890 --> 00:23:07,500
prices.

478
00:23:07,500 --> 00:23:10,829
So if you'll kind of follow my mouse up here, we're going

479
00:23:10,829 --> 00:23:13,500
to be doing this analysis for one vehicle.

480
00:23:13,500 --> 00:23:15,799
On average, we're just going to say we're going to have

481
00:23:15,799 --> 00:23:18,250
about ten thousand miles per year for a solid waste vehicle

482
00:23:18,250 --> 00:23:18,500
.

483
00:23:18,500 --> 00:23:21,539
We're probably going to run between ten, twenty thousand

484
00:23:21,539 --> 00:23:23,500
miles per year on those vehicles.

485
00:23:23,500 --> 00:23:26,829
Solid waste trucks are notoriously poor in terms of fuel

486
00:23:26,829 --> 00:23:27,500
economy.

487
00:23:27,500 --> 00:23:31,500
So three miles per gallon is not far off the mark.

488
00:23:31,500 --> 00:23:35,410
The price at the time in 2012 was three seventy CNG at the

489
00:23:35,410 --> 00:23:39,160
time was two twelve and the conversion cost, as I mentioned

490
00:23:39,160 --> 00:23:41,500
, is about forty thousand dollars.

491
00:23:41,500 --> 00:23:44,500
The payback period, if you kind of circle back over here,

492
00:23:44,500 --> 00:23:47,500
we have about five thousand dollars in annual savings.

493
00:23:47,500 --> 00:23:51,049
The payback period, given those assumptions, is about seven

494
00:23:51,049 --> 00:23:52,500
point five nine years.

495
00:23:52,500 --> 00:23:55,589
Now, that's important. This is what I would deem as best

496
00:23:55,589 --> 00:23:58,500
condition under CNG and diesel prices.

497
00:23:58,500 --> 00:24:01,930
We haven't seen the price difference at a dollar fifty

498
00:24:01,930 --> 00:24:04,500
eight essentially since that time.

499
00:24:04,500 --> 00:24:07,500
The seven point five nine year payback period.

500
00:24:07,500 --> 00:24:09,980
Most of our solid waste trucks age out at five to seven

501
00:24:09,980 --> 00:24:10,500
years.

502
00:24:10,500 --> 00:24:13,519
So even under best conditions, you're probably not recapt

503
00:24:13,519 --> 00:24:16,500
uring your capital investment on your vehicle alone.

504
00:24:16,500 --> 00:24:19,410
The contract with Zide Energy is a two point seven million

505
00:24:19,410 --> 00:24:21,500
dollar investment into the station.

506
00:24:21,500 --> 00:24:24,079
And so the only way that you're going to pay back your

507
00:24:24,079 --> 00:24:26,500
station is with significant public sales.

508
00:24:26,500 --> 00:24:28,500
And that's under best conditions.

509
00:24:28,500 --> 00:24:32,369
We fast forward to twenty seventeen and all the assumptions

510
00:24:32,369 --> 00:24:35,849
are held the same except for our diesel cost and our gas

511
00:24:35,849 --> 00:24:36,500
cost.

512
00:24:36,500 --> 00:24:39,130
So, again, that's only a twelve cents spread between those

513
00:24:39,130 --> 00:24:39,500
two.

514
00:24:39,500 --> 00:24:42,500
The payback period balloons to a hundred years.

515
00:24:42,500 --> 00:24:44,940
I've only been in solid waste a short period of time, but I

516
00:24:44,940 --> 00:24:47,369
don't think we have any vehicles that have been in service

517
00:24:47,369 --> 00:24:48,500
for a hundred years.

518
00:24:48,500 --> 00:24:51,890
And so the point of this is that the investments that we've

519
00:24:51,890 --> 00:24:55,500
made, it's unlikely that we're going to recover those.

520
00:24:55,500 --> 00:24:58,640
Really, what we want to give you a look at today is what is

521
00:24:58,640 --> 00:25:02,819
our best option moving forward to try to either recoup some

522
00:25:02,819 --> 00:25:06,500
of our costs or escape from the conversion to CNG.

523
00:25:06,500 --> 00:25:13,869
Question. Yes, sir. I know for simplicity to make it ten

524
00:25:13,869 --> 00:25:14,500
thousand miles.

525
00:25:14,500 --> 00:25:18,210
But realistically, do we have any vehicles that only have

526
00:25:18,210 --> 00:25:20,500
ten thousand miles a year put on?

527
00:25:20,500 --> 00:25:23,849
We run about 40 to 50 miles per day is what staff shared

528
00:25:23,849 --> 00:25:24,500
with me.

529
00:25:24,500 --> 00:25:28,500
And so you could technically be under ten thousand miles.

530
00:25:28,500 --> 00:25:30,170
We may have some that go up to twenty thousand miles per

531
00:25:30,170 --> 00:25:30,500
year.

532
00:25:30,500 --> 00:25:33,599
So we can certainly run this scenario with a few other

533
00:25:33,599 --> 00:25:34,500
variables.

534
00:25:34,500 --> 00:25:37,500
The principles remain the same is your payback period.

535
00:25:37,500 --> 00:25:39,470
If we run this out at twenty thousand, thirty thousand

536
00:25:39,470 --> 00:25:41,500
miles, you're probably going to cut this in half.

537
00:25:41,500 --> 00:25:44,299
And in that scenario, you would have some payback and you

538
00:25:44,299 --> 00:25:46,880
would be able to pay down some of your other investments

539
00:25:46,880 --> 00:25:49,519
and investment at two point seven million dollars over

540
00:25:49,519 --> 00:25:50,500
twenty years.

541
00:25:50,500 --> 00:25:54,220
It's you would have to maintain something like this dollar

542
00:25:54,220 --> 00:25:57,500
fifty eight spread to see that actually happen.

543
00:25:57,500 --> 00:26:02,500
And with fuel prices where they are, it's very unstable.

544
00:26:02,500 --> 00:26:07,089
We ran some sensitivity analysis on the differences between

545
00:26:07,089 --> 00:26:08,500
CNG and diesel.

546
00:26:08,500 --> 00:26:12,450
We're 95 percent certain that the max that you would see in

547
00:26:12,450 --> 00:26:16,500
terms of difference is about seventy five cents per gallon.

548
00:26:16,500 --> 00:26:19,480
And that's based on the three year historical gas prices

549
00:26:19,480 --> 00:26:21,500
that can be blown out of the water.

550
00:26:21,500 --> 00:26:24,829
But understanding that trying to sustain a dollar fifty

551
00:26:24,829 --> 00:26:28,109
eight percent gallon difference between diesel and CNG over

552
00:26:28,109 --> 00:26:30,990
a 20 year period, I wouldn't be comfortable making that

553
00:26:30,990 --> 00:26:31,500
assumption.

554
00:26:31,500 --> 00:26:35,859
How come you didn't use the three dollars and seventy five

555
00:26:35,859 --> 00:26:39,829
cents per gallon for mobile fueling instead of the we

556
00:26:39,829 --> 00:26:41,500
certainly could.

557
00:26:41,500 --> 00:26:43,500
I mean, that's what we're actually paying.

558
00:26:43,500 --> 00:26:45,500
We're not really paying to 15.

559
00:26:45,500 --> 00:26:46,500
That's correct.

560
00:26:46,500 --> 00:26:48,500
I mean, this is this is pretty close.

561
00:26:48,500 --> 00:26:50,500
But again, this is looking at a payback period.

562
00:26:50,500 --> 00:26:55,500
We know we're operating at a loss right now for the UCNG.

563
00:26:55,500 --> 00:26:57,920
If you're interested in seeing that, we can certainly go

564
00:26:57,920 --> 00:27:00,500
back and run that through over the next couple of slides.

565
00:27:00,500 --> 00:27:03,390
I will show you kind of through a pro forma what the

566
00:27:03,390 --> 00:27:05,500
financial outlook looks like.

567
00:27:05,500 --> 00:27:10,500
And so hopefully we'll answer that question.

568
00:27:10,500 --> 00:27:12,500
OK, thank you.

569
00:27:12,500 --> 00:27:14,279
So in the next couple of slides, we do have some pro formas

570
00:27:14,279 --> 00:27:14,500
.

571
00:27:14,500 --> 00:27:16,920
I want to walk through this, make sure that everyone

572
00:27:16,920 --> 00:27:19,369
understands kind of how these are laid out before we dig

573
00:27:19,369 --> 00:27:20,500
into the numbers.

574
00:27:20,500 --> 00:27:23,829
So with any pro forma, you're going to have your revenues,

575
00:27:23,829 --> 00:27:26,500
your expenditures, your net income or loss.

576
00:27:26,500 --> 00:27:29,500
In addition to that, one of the things that we've added in

577
00:27:29,500 --> 00:27:33,009
here is fuel cost savings for the purpose of these pro

578
00:27:33,009 --> 00:27:36,500
forma is we're comparing these to a baseline fuel cost.

579
00:27:36,500 --> 00:27:39,869
So everything on this slide is what our options are versus

580
00:27:39,869 --> 00:27:42,500
market price, the spot rate for diesel.

581
00:27:42,500 --> 00:27:45,500
And so down to the net income or loss, this is what we're

582
00:27:45,500 --> 00:27:48,500
projecting for the next five years on our options.

583
00:27:48,500 --> 00:27:51,829
The fuel cost and savings is really kind of a soft cost

584
00:27:51,829 --> 00:27:52,500
savings.

585
00:27:52,500 --> 00:27:55,500
And I'll explain that a little more when we get there.

586
00:27:55,500 --> 00:27:58,410
We've looked at four different scenarios in terms of what

587
00:27:58,410 --> 00:28:00,500
are our best options moving forward.

588
00:28:00,500 --> 00:28:03,500
Number one here in this column says mobile fueling.

589
00:28:03,500 --> 00:28:05,500
That is what we are currently doing.

590
00:28:05,500 --> 00:28:08,299
That is the three dollars and seventy five cents per gallon

591
00:28:08,299 --> 00:28:08,500
.

592
00:28:08,500 --> 00:28:12,490
Number two is retrofit and convert our entire twenty four

593
00:28:12,490 --> 00:28:14,500
vehicle fleet to diesel.

594
00:28:14,500 --> 00:28:16,890
We kind of looked at that and said, how do we get out of

595
00:28:16,890 --> 00:28:18,500
this the fastest way possible?

596
00:28:18,500 --> 00:28:20,500
That's what that represents.

597
00:28:20,500 --> 00:28:23,410
Number three and number four, both of those contemplate

598
00:28:23,410 --> 00:28:28,180
building the alternative fuel station as was approved by

599
00:28:28,180 --> 00:28:30,500
the PUB and council last August.

600
00:28:30,500 --> 00:28:33,210
In those, the only difference between options three and

601
00:28:33,210 --> 00:28:35,500
options for option three is for our use only.

602
00:28:35,500 --> 00:28:38,500
Option four is for public sales.

603
00:28:38,500 --> 00:28:44,599
And so with all of these, we have revenues up here that we

604
00:28:44,599 --> 00:28:46,950
do recognize city of Denton fuel sales for options three

605
00:28:46,950 --> 00:28:48,500
and options for.

606
00:28:48,500 --> 00:28:51,400
But we do not recognize public fuel sales because even if

607
00:28:51,400 --> 00:28:54,500
we offer those, we believe those to be very de minimis.

608
00:28:54,500 --> 00:28:57,450
We have a number of factors working against us that kind of

609
00:28:57,450 --> 00:29:00,279
give us pause to have any projection for revenue that we

610
00:29:00,279 --> 00:29:01,500
feel confident in.

611
00:29:01,500 --> 00:29:03,500
So let me walk through this real quickly.

612
00:29:03,500 --> 00:29:06,829
We mentioned that we had the two hundred one thousand

613
00:29:06,829 --> 00:29:10,500
dollars from this TCEQ grant that we've already expended.

614
00:29:10,500 --> 00:29:12,759
If we are not going to offer public sales, we would need to

615
00:29:12,759 --> 00:29:13,500
return that.

616
00:29:13,500 --> 00:29:14,500
We need to refund it.

617
00:29:14,500 --> 00:29:16,859
And so that's why this is a negative in these first three

618
00:29:16,859 --> 00:29:19,500
scenarios, because we're not offering public sales.

619
00:29:19,500 --> 00:29:24,000
Under the expenditure side, this is really just a mix of

620
00:29:24,000 --> 00:29:27,500
fuel purchases, operations and maintenance.

621
00:29:27,500 --> 00:29:30,380
And then you have some debt service down here on those last

622
00:29:30,380 --> 00:29:32,500
two lines that say CNG station in line.

623
00:29:32,500 --> 00:29:33,500
We do have some sunk cost.

624
00:29:33,500 --> 00:29:35,480
We have equipment on the ground that we've already

625
00:29:35,480 --> 00:29:36,500
purchased with debt.

626
00:29:36,500 --> 00:29:39,500
We also have the incremental truck cost.

627
00:29:39,500 --> 00:29:41,509
There's those twenty four vehicles at forty thousand

628
00:29:41,509 --> 00:29:43,500
dollars each that we've paid for the upgrade on.

629
00:29:43,500 --> 00:29:46,500
So that's what's represented in that line.

630
00:29:46,500 --> 00:29:47,500
So let's take scenario one.

631
00:29:47,500 --> 00:29:51,500
We run this out over the next five years.

632
00:29:51,500 --> 00:29:53,650
If we do nothing, if we stay with the mobile fueling

633
00:29:53,650 --> 00:29:56,470
platform, which we would not recommend, we're looking at a

634
00:29:56,470 --> 00:30:00,500
loss of about four million four point one million dollars.

635
00:30:00,500 --> 00:30:03,650
When we add in the difference, Brandon, to your point a

636
00:30:03,650 --> 00:30:06,089
moment ago, what is the difference between the three

637
00:30:06,089 --> 00:30:08,500
seventy five per gallon that we're paying versus diesel?

638
00:30:08,500 --> 00:30:11,609
It's about one point nine million dollars over the next

639
00:30:11,609 --> 00:30:12,500
five years.

640
00:30:12,500 --> 00:30:15,500
So it is a significant difference.

641
00:30:15,500 --> 00:30:18,930
So all that totaled out, you get about a six million dollar

642
00:30:18,930 --> 00:30:19,500
loss.

643
00:30:19,500 --> 00:30:22,500
Option number two is retrofit and convert to diesel.

644
00:30:22,500 --> 00:30:25,440
Again, we're eliminating most of the CNG cost here except

645
00:30:25,440 --> 00:30:26,500
for our sunk cost.

646
00:30:26,500 --> 00:30:30,130
But one item here, the incremental truck cost, we we we're

647
00:30:30,130 --> 00:30:32,500
not confident in this projection.

648
00:30:32,500 --> 00:30:34,460
We can certainly sharpen our pencils on this if you want

649
00:30:34,460 --> 00:30:35,500
some additional detail.

650
00:30:35,500 --> 00:30:38,829
But to reconvert a CNG vehicle back to diesel is going to

651
00:30:38,829 --> 00:30:41,500
run fifty to eighty thousand dollars each.

652
00:30:41,500 --> 00:30:43,819
And one of the reasons why we would not recommend that

653
00:30:43,819 --> 00:30:45,950
option is because we don't know what that truck's

654
00:30:45,950 --> 00:30:48,430
performance is going to look like after we've we've done

655
00:30:48,430 --> 00:30:49,500
that conversion.

656
00:30:49,500 --> 00:30:52,630
We think it's going to require some significant work and we

657
00:30:52,630 --> 00:30:55,819
may be better off just totally replacing the vehicles ahead

658
00:30:55,819 --> 00:30:56,500
of time.

659
00:30:56,500 --> 00:31:00,500
So that brings you to a two point five million dollar loss.

660
00:31:00,500 --> 00:31:05,500
Station option three station for COD use only.

661
00:31:05,500 --> 00:31:08,000
The only difference between option three and option four is

662
00:31:08,000 --> 00:31:10,500
the grant funds of about six hundred thousand dollars.

663
00:31:10,500 --> 00:31:13,359
So in this scenario we'd be refunding our portion of the

664
00:31:13,359 --> 00:31:16,240
grant and we would not be realizing the remainder as you

665
00:31:16,240 --> 00:31:17,500
have an option for.

666
00:31:17,500 --> 00:31:20,089
And so you get about a one point four million dollar loss

667
00:31:20,089 --> 00:31:21,500
compared to diesel here.

668
00:31:21,500 --> 00:31:25,259
One point one overall because you do get some price break

669
00:31:25,259 --> 00:31:28,500
for CNG to diesel in both of these scenarios.

670
00:31:28,500 --> 00:31:30,140
And again if you do public sales you realize the grant

671
00:31:30,140 --> 00:31:30,500
funds.

672
00:31:30,500 --> 00:31:35,500
So that's down to about five hundred twenty seven thousand.

673
00:31:35,500 --> 00:31:37,500
I know that's a lot of information to take in.

674
00:31:37,500 --> 00:31:41,450
Are there any questions on any of the assumptions or any of

675
00:31:41,450 --> 00:31:43,500
the calculations in here?

676
00:31:43,500 --> 00:31:46,500
What's the cost of the truck?

677
00:31:46,500 --> 00:31:48,500
I may need a little bit of help on that.

678
00:31:48,500 --> 00:31:51,500
Nick do you do you know off the top of your head?

679
00:31:51,500 --> 00:32:01,200
I'd say around roll off trucks are around one hundred and

680
00:32:01,200 --> 00:32:08,500
sixty to one hundred eighty front loaders.

681
00:32:08,500 --> 00:32:10,500
Questions?

682
00:32:10,500 --> 00:32:11,500
All right.

683
00:32:11,500 --> 00:32:15,500
I've got a question on fuel cost savings.

684
00:32:15,500 --> 00:32:19,950
So if we're looking at a bottom line let's say let's take

685
00:32:19,950 --> 00:32:23,500
number three here of one point one million.

686
00:32:23,500 --> 00:32:29,410
What what would the price of diesel have to be to bring the

687
00:32:29,410 --> 00:32:35,190
fuel cost savings to say cut that in half and maybe get it

688
00:32:35,190 --> 00:32:41,500
to where the word public sales would be per gallon.

689
00:32:41,500 --> 00:32:43,500
We have to go back and look at that now.

690
00:32:43,500 --> 00:32:46,559
Now under this analysis the assumptions that we have under

691
00:32:46,559 --> 00:32:49,650
fuel cost savings is a difference of about twenty two cents

692
00:32:49,650 --> 00:32:50,500
per gallon.

693
00:32:50,500 --> 00:32:53,829
Like I said we did some sensitivity analysis that got it up

694
00:32:53,829 --> 00:32:55,500
to seventy five cents a gallon.

695
00:32:55,500 --> 00:32:58,369
In the scenarios that we ran I don't think that we had

696
00:32:58,369 --> 00:33:01,500
anything that would have covered our losses here.

697
00:33:01,500 --> 00:33:05,500
Now if you want to cut that in half.

698
00:33:05,500 --> 00:33:06,500
Yeah I'm just trying to see.

699
00:33:06,500 --> 00:33:10,119
If you're looking at about three times the difference you'd

700
00:33:10,119 --> 00:33:13,589
be about sixty sixty six cents difference between diesel

701
00:33:13,589 --> 00:33:16,500
and CNG to cut that in half is what I would guess.

702
00:33:16,500 --> 00:33:19,869
In option number four then the only difference is the full

703
00:33:19,869 --> 00:33:20,500
grant.

704
00:33:20,500 --> 00:33:21,500
Correct.

705
00:33:21,500 --> 00:33:23,500
And we're assuming there's no public sales.

706
00:33:23,500 --> 00:33:24,500
That's correct.

707
00:33:24,500 --> 00:33:25,500
Okay.

708
00:33:25,500 --> 00:33:26,500
I want to make sure that's.

709
00:33:26,500 --> 00:33:29,579
One of the things I will mention with public sales and I'll

710
00:33:29,579 --> 00:33:32,670
talk more about this in a few slides is we're not confident

711
00:33:32,670 --> 00:33:34,500
in the expenses listed here.

712
00:33:34,500 --> 00:33:36,779
We think there's going to be additional expense beyond what

713
00:33:36,779 --> 00:33:37,500
we projected.

714
00:33:37,500 --> 00:33:39,500
Devils in the details with this type of stuff.

715
00:33:39,500 --> 00:33:42,500
None of us have ever run a gas station.

716
00:33:42,500 --> 00:33:45,500
And so we are somewhat inexperienced in this.

717
00:33:45,500 --> 00:33:48,319
And so I'll kind of run through a few of those things in a

718
00:33:48,319 --> 00:33:49,500
couple of slides.

719
00:33:49,500 --> 00:33:52,329
Some potential gotchas with public sales that we may not

720
00:33:52,329 --> 00:33:53,500
have anticipated.

721
00:33:53,500 --> 00:33:55,500
Just one more question.

722
00:33:55,500 --> 00:34:01,500
Is CNG fuel cleaner than diesel?

723
00:34:01,500 --> 00:34:04,039
For that I've had Dr. Banks help me out a little bit with

724
00:34:04,039 --> 00:34:04,500
this.

725
00:34:04,500 --> 00:34:12,559
Kenny do you want to talk a little bit about the

726
00:34:12,559 --> 00:34:20,500
environmental differences between the two.

727
00:34:20,500 --> 00:34:24,500
So I thought that question might come up.

728
00:34:24,500 --> 00:34:29,500
And so I put together a presentation on it.

729
00:34:29,500 --> 00:34:33,500
Not an easy question to answer.

730
00:34:33,500 --> 00:34:39,500
And I'll kind of walk through how I try to analyze it.

731
00:34:39,500 --> 00:34:41,219
There's a lot of new software programs that are out right

732
00:34:41,219 --> 00:34:41,500
now.

733
00:34:41,500 --> 00:34:45,739
Argonne laboratories has been running a program called

734
00:34:45,739 --> 00:34:46,500
greet.

735
00:34:46,500 --> 00:34:49,559
Which is the greenhouse gas regulated emission and energy

736
00:34:49,559 --> 00:34:51,500
use and transportation program.

737
00:34:51,500 --> 00:34:55,070
And one of the interesting parts about this is that this

738
00:34:55,070 --> 00:34:59,179
particular program is used to perform what's referred to as

739
00:34:59,179 --> 00:35:01,500
wells to wheels analysis.

740
00:35:01,500 --> 00:35:04,960
So there's several different components of operation of a

741
00:35:04,960 --> 00:35:09,159
vehicle and evaluating the environmental impacts of a fuel

742
00:35:09,159 --> 00:35:09,500
platform.

743
00:35:09,500 --> 00:35:12,389
And so you've got the actual environmental impacts

744
00:35:12,389 --> 00:35:15,500
associated with obtaining the fuel and processing that fuel

745
00:35:15,500 --> 00:35:18,500
and delivering that fuel to a pump.

746
00:35:18,500 --> 00:35:22,849
You've got the component from the pump to the use in the

747
00:35:22,849 --> 00:35:24,500
vehicle itself.

748
00:35:24,500 --> 00:35:27,989
And then you've got the sum of those two which is basically

749
00:35:27,989 --> 00:35:29,500
the total operation.

750
00:35:29,500 --> 00:35:34,139
So I thought that was the best way to try to look at this

751
00:35:34,139 --> 00:35:35,500
situation.

752
00:35:35,500 --> 00:35:37,500
A lot of different analyses can be done in this.

753
00:35:37,500 --> 00:35:42,500
I basically went with the wells to wheels analysis.

754
00:35:42,500 --> 00:35:46,889
We used a 2015 platform vehicle refuse truck of the

755
00:35:46,889 --> 00:35:50,500
appropriate weight of the trucks that we use.

756
00:35:50,500 --> 00:35:53,500
This gives you a screenshot of what the analyses look like.

757
00:35:53,500 --> 00:35:57,500
And you can see that we can look at all different types of

758
00:35:57,500 --> 00:36:00,500
emissions, water use, you name it.

759
00:36:00,500 --> 00:36:04,500
It's a very extensive analysis.

760
00:36:04,500 --> 00:36:08,340
Give you a real quick look at some of the high points of

761
00:36:08,340 --> 00:36:11,500
what the output that I chose to look at.

762
00:36:11,500 --> 00:36:15,190
I really wanted to focus on volatile organic compounds,

763
00:36:15,190 --> 00:36:17,500
carbon monoxide, nitrogen oxides.

764
00:36:17,500 --> 00:36:21,500
These two are some of your main precursors to ozone.

765
00:36:21,500 --> 00:36:24,320
And then I also wanted to look at a couple of the elements

766
00:36:24,320 --> 00:36:26,989
that deal with greenhouse gas emissions like methane

767
00:36:26,989 --> 00:36:32,500
emissions, carbon dioxide, and nitrogen oxides.

768
00:36:32,500 --> 00:36:35,500
So this table is kind of hard to make a direct comparison.

769
00:36:35,500 --> 00:36:39,500
So what I tried to do is look at it on a percentage basis.

770
00:36:39,500 --> 00:36:43,489
Hopefully that will be a little bit easier to kind of asc

771
00:36:43,489 --> 00:36:45,500
ertain what's going on.

772
00:36:45,500 --> 00:36:48,829
Basically, if you look at the total energy, the B20

773
00:36:48,829 --> 00:36:54,500
platform, which is what we use in our vehicle, biodiesel,

774
00:36:54,500 --> 00:36:56,500
is about 82%.

775
00:36:56,500 --> 00:37:05,500
This is a B20 comparison to compress natural gas.

776
00:37:05,500 --> 00:37:10,659
So any number lower than 100% will tell you that the B20 is

777
00:37:10,659 --> 00:37:14,500
a lower emitting or lower energy consumption.

778
00:37:14,500 --> 00:37:19,829
Anything greater than 100% would tell you that the CNG is

779
00:37:19,829 --> 00:37:21,500
the lower option.

780
00:37:21,500 --> 00:37:28,000
So in looking at the volatile organic compounds, we're

781
00:37:28,000 --> 00:37:32,699
actually seeing quite a bit less produced by the CNG

782
00:37:32,699 --> 00:37:33,500
platform.

783
00:37:33,500 --> 00:37:37,500
Much less carbon monoxide produced.

784
00:37:37,500 --> 00:37:43,500
Interestingly, in operation, it's going to produce about

785
00:37:43,500 --> 00:37:47,500
twice the amount of nitrogen oxides.

786
00:37:47,500 --> 00:37:52,360
But if you look at the total wells to wheel analysis, it's

787
00:37:52,360 --> 00:37:56,500
actually only about 10% or 11% more.

788
00:37:56,500 --> 00:37:58,500
Sorry, I'm having some mouse problems here.

789
00:37:58,500 --> 00:38:03,500
PM10, particulate matter of 10 microns or greater.

790
00:38:03,500 --> 00:38:07,760
B20 produces about the same amount when in operation, but

791
00:38:07,760 --> 00:38:12,030
about half again as much when you're looking at the overall

792
00:38:12,030 --> 00:38:13,500
full life cycle.

793
00:38:13,500 --> 00:38:19,500
Similar situation with particulate matter of 2.5 microns.

794
00:38:19,500 --> 00:38:23,500
Sulfur dioxide, B20 is slightly higher.

795
00:38:23,500 --> 00:38:25,500
This one is the very interesting part.

796
00:38:25,500 --> 00:38:30,369
When you look at the methane emissions, B20 produces much

797
00:38:30,369 --> 00:38:34,500
less methane when operating and for the full life cycle

798
00:38:34,500 --> 00:38:38,500
when compared to a compressed natural gas platform.

799
00:38:38,500 --> 00:38:41,500
CO2 is slightly higher.

800
00:38:41,500 --> 00:38:46,829
And then nitrogen oxides produces more when operating and

801
00:38:46,829 --> 00:38:49,500
then more for full life cycle.

802
00:38:49,500 --> 00:38:54,829
So what I tried to do is give you a sense from a ground

803
00:38:54,829 --> 00:38:59,550
level ozone standpoint, you're going to have slightly

804
00:38:59,550 --> 00:39:01,500
higher nitrogen oxides.

805
00:39:01,500 --> 00:39:04,829
We have a tendency, depending on the model that you look at

806
00:39:04,829 --> 00:39:07,500
, for this area to be nitrogen oxide limits.

807
00:39:07,500 --> 00:39:09,500
So limited.

808
00:39:09,500 --> 00:39:12,840
Some models would suggest that we're transitional, keeping

809
00:39:12,840 --> 00:39:15,010
in mind that you've got to have both volatile organic

810
00:39:15,010 --> 00:39:18,500
compounds and nitrogen oxides to form ozone.

811
00:39:18,500 --> 00:39:21,500
It's more about the relative proportion of them.

812
00:39:21,500 --> 00:39:27,500
So it's again a little bit less on the volatile organics.

813
00:39:27,500 --> 00:39:33,159
So those times where volatile organic limited, it would

814
00:39:33,159 --> 00:39:37,940
actually be better for nitrogen oxide, which is, I would

815
00:39:37,940 --> 00:39:45,139
argue, for our area tends to be the larger predominant type

816
00:39:45,139 --> 00:39:47,500
of ozone formation.

817
00:39:47,500 --> 00:39:51,260
You're going to have a tendency to see a slightly greater

818
00:39:51,260 --> 00:39:55,349
effect from full life cycle comparing B20 to compressed

819
00:39:55,349 --> 00:39:56,500
natural gas.

820
00:39:56,500 --> 00:40:01,260
However, if you look at the global warming potential,

821
00:40:01,260 --> 00:40:06,769
especially on a 20-year basis, that methane production

822
00:40:06,769 --> 00:40:11,570
makes a very large difference when you're comparing these

823
00:40:11,570 --> 00:40:13,500
two fuel platforms.

824
00:40:13,500 --> 00:40:18,840
And so your net global warming potential on a 20-year basis

825
00:40:18,840 --> 00:40:23,800
is going to be substantially higher for compressed natural

826
00:40:23,800 --> 00:40:24,500
gas.

827
00:40:24,500 --> 00:40:28,550
On a 20-year basis, it's going to, I'm sorry, on a 100-year

828
00:40:28,550 --> 00:40:31,500
basis rather, it's going to be almost a wash.

829
00:40:31,500 --> 00:40:35,849
So that's a very rough thumbnail sketch of kind of the

830
00:40:35,849 --> 00:40:38,500
difference between the two.

831
00:40:38,500 --> 00:40:43,489
So in summary, I would say that from a ground level ozone,

832
00:40:43,489 --> 00:40:48,500
it's slightly more impactive to go with a B20.

833
00:40:48,500 --> 00:40:51,500
But keep in mind that that gap has closed substantially.

834
00:40:51,500 --> 00:40:53,440
And I think it's fair to point out it's closed

835
00:40:53,440 --> 00:40:56,500
substantially since when this was evaluated in 2012.

836
00:40:56,500 --> 00:40:59,829
The newer diesel engines have a lot more emission controls

837
00:40:59,829 --> 00:41:00,500
on them.

838
00:41:00,500 --> 00:41:04,360
There are additives that are provided in those engines that

839
00:41:04,360 --> 00:41:08,179
are designed to try to deal with some of these contaminants

840
00:41:08,179 --> 00:41:08,500
.

841
00:41:08,500 --> 00:41:12,880
But the global warming potential in terms of greenhouse gas

842
00:41:12,880 --> 00:41:17,199
emissions from comparing the B20 platform to compressed

843
00:41:17,199 --> 00:41:19,699
natural gas, compressed natural gas is going to have a

844
00:41:19,699 --> 00:41:21,500
greater impact, especially on a 20-year basis.

845
00:41:21,500 --> 00:41:24,500
It's about a wash on a 100-year basis.

846
00:41:24,500 --> 00:41:29,670
So very brief, very high-level overview, but I'd be happy

847
00:41:29,670 --> 00:41:32,500
to try to answer any questions.

848
00:41:32,500 --> 00:41:36,500
What do you mean when you say biodiesel uses less energy?

849
00:41:36,500 --> 00:41:40,500
Does that mean that it stores more and is more efficient?

850
00:41:40,500 --> 00:41:44,690
It has to do with the energy of production and the energy

851
00:41:44,690 --> 00:41:45,500
of use.

852
00:41:45,500 --> 00:41:48,650
So on a per gallon equivalent, you're actually going to use

853
00:41:48,650 --> 00:41:51,500
a little bit more CNG than you are with biodiesel.

854
00:41:51,500 --> 00:41:56,360
And then it also has to do with the processing and the

855
00:41:56,360 --> 00:41:59,500
transport of that fuel as well.

856
00:41:59,500 --> 00:42:01,880
And so you're going to use a little bit less there, too,

857
00:42:01,880 --> 00:42:02,500
overall.

858
00:42:02,500 --> 00:42:05,500
Okay. And can you back up one slide?

859
00:42:05,500 --> 00:42:06,500
This one?

860
00:42:06,500 --> 00:42:07,500
No, one slide.

861
00:42:07,500 --> 00:42:08,500
This one.

862
00:42:08,500 --> 00:42:16,500
So is there such thing as a grid-dependent refuse truck?

863
00:42:16,500 --> 00:42:20,500
Because that says grid-independent.

864
00:42:20,500 --> 00:42:24,849
They don't have that as an option in there, so I'm not

865
00:42:24,849 --> 00:42:27,500
really sure what that means.

866
00:42:27,500 --> 00:42:31,500
That is a -- yeah, yeah.

867
00:42:31,500 --> 00:42:35,500
I don't know if there is an intention at some point.

868
00:42:35,500 --> 00:42:37,650
This program has been around for a while and has had some

869
00:42:37,650 --> 00:42:38,500
various updates.

870
00:42:38,500 --> 00:42:42,199
I have a feeling that they're adding these in there with

871
00:42:42,199 --> 00:42:45,090
the anticipation that at some point there will be a

872
00:42:45,090 --> 00:42:46,500
platform like that,

873
00:42:46,500 --> 00:42:48,860
and that way they can convert back and forth with older

874
00:42:48,860 --> 00:42:49,500
versions.

875
00:42:49,500 --> 00:42:50,500
That would be my guess.

876
00:42:50,500 --> 00:42:52,500
Okay. I just saw that.

877
00:42:52,500 --> 00:42:53,500
Right.

878
00:42:53,500 --> 00:42:57,500
Just so I can get my head around it.

879
00:42:57,500 --> 00:43:01,130
So basically what you're saying, and I'm trying to get it

880
00:43:01,130 --> 00:43:03,500
all down to the layman's terms,

881
00:43:03,500 --> 00:43:11,500
what we're saying is that CNG is not as clean as diesel?

882
00:43:11,500 --> 00:43:15,500
I don't know if I would say that.

883
00:43:15,500 --> 00:43:19,190
What I would say is that when we've evaluated these two

884
00:43:19,190 --> 00:43:22,750
fuel platforms, at least my perspective when we've looked

885
00:43:22,750 --> 00:43:23,500
at them,

886
00:43:23,500 --> 00:43:26,300
we've been mainly focused on the operation of the vehicle

887
00:43:26,300 --> 00:43:28,500
and the production of ground-level ozone.

888
00:43:28,500 --> 00:43:30,500
That's kind of been the focus.

889
00:43:30,500 --> 00:43:33,500
And the operation of the vehicle is what, five years?

890
00:43:33,500 --> 00:43:36,500
Yes, but keep in mind this is on a per-mile basis.

891
00:43:36,500 --> 00:43:44,929
So it doesn't, in terms of the number of miles that it's on

892
00:43:44,929 --> 00:43:47,500
a per-mile basis.

893
00:43:47,500 --> 00:43:52,369
And basically it would be this multiplied by whatever miles

894
00:43:52,369 --> 00:43:54,500
the vehicle has put on.

895
00:43:54,500 --> 00:43:59,489
So effectively this is a way to normalize those platforms

896
00:43:59,489 --> 00:44:02,650
and kind of take the relative miles driven by each one out

897
00:44:02,650 --> 00:44:03,500
of the equation.

898
00:44:03,500 --> 00:44:07,909
So we're assuming they're driven the same miles and to make

899
00:44:07,909 --> 00:44:11,179
it easy we're just going to put it in a single per-mile

900
00:44:11,179 --> 00:44:13,500
emission for each fuel platform.

901
00:44:13,500 --> 00:44:17,670
So circling back, I think that the original intention was

902
00:44:17,670 --> 00:44:20,500
to look at it from an impact to ozone.

903
00:44:20,500 --> 00:44:26,480
And although biodiesel platforms and diesel platforms in

904
00:44:26,480 --> 00:44:29,500
general have closed that gap,

905
00:44:29,500 --> 00:44:34,099
they still are going to be on average and keeping in mind

906
00:44:34,099 --> 00:44:37,500
that we're focusing on nitrogen oxides

907
00:44:37,500 --> 00:44:42,829
because nitrogen oxides tend to be the limiting factor in

908
00:44:42,829 --> 00:44:44,500
this area, but not always.

909
00:44:44,500 --> 00:44:47,500
Sometimes it's volatile organic compounds.

910
00:44:47,500 --> 00:44:51,989
And basically what we're seeing here is if you look at the

911
00:44:51,989 --> 00:44:53,500
actual operation,

912
00:44:53,500 --> 00:44:57,420
a biodiesel is going to produce quite a bit more, about

913
00:44:57,420 --> 00:44:59,500
double nitrogen oxides.

914
00:44:59,500 --> 00:45:02,420
But if you look at the entire fuel cycle, taking into

915
00:45:02,420 --> 00:45:06,510
account the obtaining of this material all the way through

916
00:45:06,510 --> 00:45:07,500
the full process,

917
00:45:07,500 --> 00:45:10,539
that gap is actually pretty small. It's only about 11

918
00:45:10,539 --> 00:45:11,500
percent greater.

919
00:45:11,500 --> 00:45:19,480
So I would say from an ozone standpoint, a B-20 vehicle is

920
00:45:19,480 --> 00:45:26,500
going to be slightly worse than a CNG vehicle today.

921
00:45:26,500 --> 00:45:33,460
In terms of greenhouse gas emissions, fuel, full cycle,

922
00:45:33,460 --> 00:45:36,829
everything from fuel use all the way back to the well

923
00:45:36,829 --> 00:45:37,500
itself,

924
00:45:37,500 --> 00:45:40,880
with the estimations in this model, would suggest that the

925
00:45:40,880 --> 00:45:46,599
greenhouse gas potential of a CNG vehicle is greater than a

926
00:45:46,599 --> 00:45:50,500
biodiesel vehicle on a 20-year basis.

927
00:45:50,500 --> 00:45:56,280
Those emissions, some molecules like methane, don't last as

928
00:45:56,280 --> 00:45:59,989
long in the atmosphere as other molecules like nitrogen ox

929
00:45:59,989 --> 00:46:00,500
ides.

930
00:46:00,500 --> 00:46:06,210
That's why you have to look at it at a 20-year basis and a

931
00:46:06,210 --> 00:46:12,500
100-year basis or whatever year factor makes sense.

932
00:46:12,500 --> 00:46:16,500
Any other questions?

933
00:46:16,500 --> 00:46:21,530
It also reminds you, when you speak, make sure your light

934
00:46:21,530 --> 00:46:25,500
is green so we pick you up on the recording.

935
00:46:25,500 --> 00:46:33,179
Well, I guess the idea of CNG, it's not really an economic

936
00:46:33,179 --> 00:46:37,989
decision, obviously, unless you look at it as what's the

937
00:46:37,989 --> 00:46:44,500
best way, what's the least cost of it.

938
00:46:44,500 --> 00:46:50,159
I guess throwing in the option of biodiesel versus, because

939
00:46:50,159 --> 00:46:55,699
really you're picking up your emissions savings from the

940
00:46:55,699 --> 00:46:57,500
production side.

941
00:46:57,500 --> 00:46:58,500
Right.

942
00:46:58,500 --> 00:46:59,500
It's where that is.

943
00:46:59,500 --> 00:47:03,500
Right.

944
00:47:03,500 --> 00:47:08,500
Okay. Anybody else? Thank you.

945
00:47:08,500 --> 00:47:15,460
All right. So back to the financial picture a little bit.

946
00:47:15,460 --> 00:47:15,500
So this is, again, a baseline compared to diesel.

947
00:47:15,500 --> 00:47:18,300
From a staff perspective, what we wanted to present to you

948
00:47:18,300 --> 00:47:20,840
is what we believe to be the most viable options moving

949
00:47:20,840 --> 00:47:21,500
forward.

950
00:47:21,500 --> 00:47:24,460
And so for our next pro forma, we're actually going to

951
00:47:24,460 --> 00:47:26,500
subtract out the mobile fueling.

952
00:47:26,500 --> 00:47:29,090
Obviously, we need to get off that platform as fast as we

953
00:47:29,090 --> 00:47:29,500
can.

954
00:47:29,500 --> 00:47:31,500
And then we also took out...

955
00:47:31,500 --> 00:47:33,190
Go ahead, Charlie. We're probably going to ask the same

956
00:47:33,190 --> 00:47:33,500
question. Go.

957
00:47:33,500 --> 00:47:38,139
I have one question before you move forward. Option number

958
00:47:38,139 --> 00:47:42,500
two, where you retrofit your entire fleet, I guess.

959
00:47:42,500 --> 00:47:45,550
Did you look at it on the basis of attrition of your

960
00:47:45,550 --> 00:47:49,429
vehicles since they normally only last, what, say, five to

961
00:47:49,429 --> 00:47:50,500
seven years?

962
00:47:50,500 --> 00:47:54,530
Right. This was a very quick and, I mean, this is an

963
00:47:54,530 --> 00:47:55,500
estimate.

964
00:47:55,500 --> 00:47:58,849
So I think that's one option that we could certainly go

965
00:47:58,849 --> 00:48:02,130
back and take a look at if you're interested in that is

966
00:48:02,130 --> 00:48:05,489
which vehicles do we want to allow to just go ahead and

967
00:48:05,489 --> 00:48:06,500
replace today?

968
00:48:06,500 --> 00:48:09,829
I will say this, that we have had some recent purchases on

969
00:48:09,829 --> 00:48:12,500
this that's going to make that very costly.

970
00:48:12,500 --> 00:48:14,800
Most of our older vehicles, I think we've probably got

971
00:48:14,800 --> 00:48:17,360
about eight to 12 that would probably be good candidates

972
00:48:17,360 --> 00:48:20,500
for just let's just go ahead and replace it now, you know,

973
00:48:20,500 --> 00:48:22,500
a couple years early.

974
00:48:22,500 --> 00:48:25,090
But at least half of those 24 vehicles have been purchased

975
00:48:25,090 --> 00:48:26,500
in the last two to three years.

976
00:48:26,500 --> 00:48:29,909
And so you're going to be upside down on your financing of

977
00:48:29,909 --> 00:48:30,500
that.

978
00:48:30,500 --> 00:48:33,659
And you're going to be incurring some additional cost. It's

979
00:48:33,659 --> 00:48:34,500
certainly an option.

980
00:48:34,500 --> 00:48:36,500
It's just not one that we put a lot of pen to pad on.

981
00:48:36,500 --> 00:48:40,219
This was kind of our estimate on just straight retrofit for

982
00:48:40,219 --> 00:48:41,500
those vehicles.

983
00:48:41,500 --> 00:48:44,050
And the total fleet is 24 or is there more than 24 in the

984
00:48:44,050 --> 00:48:44,500
fleet?

985
00:48:44,500 --> 00:48:48,929
There's 24 CNG's as we talked today. We've put the stops on

986
00:48:48,929 --> 00:48:51,500
any additional investments in CNG.

987
00:48:51,500 --> 00:48:54,500
But what is our total fleet? So we have some diesel.

988
00:48:54,500 --> 00:48:56,500
This is about 40% of our fleet.

989
00:48:56,500 --> 00:48:57,500
Okay. Right now.

990
00:48:57,500 --> 00:48:59,889
Now that does not include light duty vehicles like pickup

991
00:48:59,889 --> 00:49:01,500
trucks, cars, things like that.

992
00:49:01,500 --> 00:49:04,500
This is really just our operation trucks.

993
00:49:04,500 --> 00:49:08,760
So this station would only be servicing about 40% of our

994
00:49:08,760 --> 00:49:09,500
fleet?

995
00:49:09,500 --> 00:49:12,980
Well, that station currently services our fleet today

996
00:49:12,980 --> 00:49:15,500
because it has other pumps and stuff.

997
00:49:15,500 --> 00:49:18,500
The new pumps would service 40% of our fleet.

998
00:49:18,500 --> 00:49:21,829
The $2.7 million investment that we're talking about, it

999
00:49:21,829 --> 00:49:23,500
would be for 40%.

1000
00:49:23,500 --> 00:49:26,440
And what our recommendation would be, not to get too far

1001
00:49:26,440 --> 00:49:27,500
ahead of ourselves,

1002
00:49:27,500 --> 00:49:30,630
but we would recommend aging out this fleet until gas

1003
00:49:30,630 --> 00:49:33,659
prices would dictate that we can recover at least our

1004
00:49:33,659 --> 00:49:35,500
incremental cost for conversion.

1005
00:49:35,500 --> 00:49:37,500
We're not even covering that cost right now.

1006
00:49:37,500 --> 00:49:41,480
And so it's a financial loser unless there's a big enough

1007
00:49:41,480 --> 00:49:44,500
margin to cover that conversion cost.

1008
00:49:44,500 --> 00:49:49,210
And back to option two, I think I heard you say you would

1009
00:49:49,210 --> 00:49:52,500
not recommend trying to switch them back to diesel

1010
00:49:52,500 --> 00:49:55,050
because you don't know what you're going to get operation

1011
00:49:55,050 --> 00:49:56,500
ally once you've done that.

1012
00:49:56,500 --> 00:49:59,300
Yeah, it's something we haven't fully vetted, and I'm not

1013
00:49:59,300 --> 00:50:02,449
sure of too many folks out there that have gone through

1014
00:50:02,449 --> 00:50:03,500
that hassle.

1015
00:50:03,500 --> 00:50:06,360
I know when we talked to fleet, we talked to them just

1016
00:50:06,360 --> 00:50:09,519
briefly about this, and the warning lights were flashing

1017
00:50:09,519 --> 00:50:11,500
all over the place whenever that conversation came up.

1018
00:50:11,500 --> 00:50:14,360
I think, to Mr. Jackson's point, if that's something we

1019
00:50:14,360 --> 00:50:16,829
want to entertain, if we want to try to step away from as

1020
00:50:16,829 --> 00:50:19,500
many of these vehicles as fast as possible,

1021
00:50:19,500 --> 00:50:22,010
probably the best option would be to go ahead and replace a

1022
00:50:22,010 --> 00:50:25,070
few early and then allow those others to age out to such a

1023
00:50:25,070 --> 00:50:28,260
point to where it makes a little bit more sense financially

1024
00:50:28,260 --> 00:50:28,500
.

1025
00:50:28,500 --> 00:50:29,500
Barbara.

1026
00:50:29,500 --> 00:50:33,500
Is there a market for us to sell the ones we have?

1027
00:50:33,500 --> 00:50:36,500
So this is another bit of bad news.

1028
00:50:36,500 --> 00:50:38,500
There's not a huge market out there for CNG.

1029
00:50:38,500 --> 00:50:41,500
There's not a lot of cities that are on this.

1030
00:50:41,500 --> 00:50:44,650
I think Terrell and San Antonio are the two that we have as

1031
00:50:44,650 --> 00:50:45,500
examples.

1032
00:50:45,500 --> 00:50:51,130
Last week, we got $60,000 each for a pair of diesel front

1033
00:50:51,130 --> 00:50:53,500
load or rear load trucks.

1034
00:50:53,500 --> 00:50:56,409
I haven't verified this, but we heard that a similar CNG

1035
00:50:56,409 --> 00:50:58,500
vehicle brought $1,000.

1036
00:50:58,500 --> 00:51:03,000
So that's hearsay. I'll put that caveat out there, but we

1037
00:51:03,000 --> 00:51:06,869
think that the salvage value of these are going to be

1038
00:51:06,869 --> 00:51:11,389
significantly less than diesel just because the demand isn

1039
00:51:11,389 --> 00:51:12,500
't there.

1040
00:51:12,500 --> 00:51:22,710
So in the older CNG models die, we will replace them with

1041
00:51:22,710 --> 00:51:23,500
what? With diesel?

1042
00:51:23,500 --> 00:51:28,940
We would go back to diesel would be our recommendation,

1043
00:51:28,940 --> 00:51:30,500
absolutely.

1044
00:51:30,500 --> 00:51:33,579
So for this pro forma, again, we took out options one and

1045
00:51:33,579 --> 00:51:36,500
two just because we don't see those as very viable.

1046
00:51:36,500 --> 00:51:39,409
So really what we're left with is completing the

1047
00:51:39,409 --> 00:51:41,500
construction of the station.

1048
00:51:41,500 --> 00:51:44,650
The real policy question for the PUB and what we propose to

1049
00:51:44,650 --> 00:51:47,170
the council is, do you want to move forward public sales or

1050
00:51:47,170 --> 00:51:47,500
not?

1051
00:51:47,500 --> 00:51:50,469
And again, for the purposes of this pro forma, all that

1052
00:51:50,469 --> 00:51:54,500
that's contemplating is that $600,000 in grant funds.

1053
00:51:54,500 --> 00:51:57,050
The difference in this pro forma versus the other one is,

1054
00:51:57,050 --> 00:52:00,269
to Mr. Caroll's point a little bit earlier, what does it

1055
00:52:00,269 --> 00:52:03,500
look like comparing to what we're doing today?

1056
00:52:03,500 --> 00:52:06,300
And so all these numbers are the same down to the net

1057
00:52:06,300 --> 00:52:07,500
income, net loss.

1058
00:52:07,500 --> 00:52:10,500
The difference is your fuel costs/savings.

1059
00:52:10,500 --> 00:52:13,829
And so by pressing forward, completing the station, you do

1060
00:52:13,829 --> 00:52:17,389
save about $1.8 million over the next five years by getting

1061
00:52:17,389 --> 00:52:19,500
off the mobile fueling platform.

1062
00:52:19,500 --> 00:52:22,860
And so if you take that angle in the analysis, if you don't

1063
00:52:22,860 --> 00:52:26,260
compare it to what we would pay diesel wise, if you compare

1064
00:52:26,260 --> 00:52:29,030
it to mobile fueling, there is a bit of a rosier picture

1065
00:52:29,030 --> 00:52:29,500
here.

1066
00:52:29,500 --> 00:52:33,519
And so if we use it for city of Denton use only, we would

1067
00:52:33,519 --> 00:52:38,500
estimate about a $390,000 net positive to this.

1068
00:52:38,500 --> 00:52:43,829
If we do public sales, again, you're adding the $600,000 or

1069
00:52:43,829 --> 00:52:45,500
so in grant funding.

1070
00:52:45,500 --> 00:52:47,510
I mentioned earlier that there are some additional

1071
00:52:47,510 --> 00:52:49,500
considerations if you want to do public sales.

1072
00:52:49,500 --> 00:52:52,199
And again, this is stuff that all of us are a little bit

1073
00:52:52,199 --> 00:52:54,500
out of our depth on, to be honest with you.

1074
00:52:54,500 --> 00:52:57,159
Competition, right now there is absolutely, in my

1075
00:52:57,159 --> 00:53:00,400
understanding, zero infrastructure, zero pumps in the city

1076
00:53:00,400 --> 00:53:01,500
of Denton for CNG.

1077
00:53:01,500 --> 00:53:03,500
That's kind of why we are where we are.

1078
00:53:03,500 --> 00:53:08,059
If QT had some pumps right now or loves, then that's what

1079
00:53:08,059 --> 00:53:10,500
we would be recommending.

1080
00:53:10,500 --> 00:53:14,420
However, if we install this station, we want to offer

1081
00:53:14,420 --> 00:53:17,900
public sales and QT puts one in behind us, then public

1082
00:53:17,900 --> 00:53:20,489
sales evaporates because we're never going to compete with

1083
00:53:20,489 --> 00:53:21,500
them on a cost basis.

1084
00:53:21,500 --> 00:53:24,500
Plus, you can also go get some Twizzlers and some beef jer

1085
00:53:24,500 --> 00:53:27,550
ky at the service station that we're not going to be selling

1086
00:53:27,550 --> 00:53:28,500
at our place.

1087
00:53:28,500 --> 00:53:33,489
Administrative costs, we don't know exactly what those are,

1088
00:53:33,489 --> 00:53:35,280
but it's not a stretch to think that we're going to need at

1089
00:53:35,280 --> 00:53:38,869
least a full-time employee to manage the operational

1090
00:53:38,869 --> 00:53:40,500
expenses with this, the maintenance.

1091
00:53:40,500 --> 00:53:44,159
You know, if you have a full-time employee, $50,000 to $60,

1092
00:53:44,159 --> 00:53:47,840
000 a year, we're going to buy it into that $600,000 very

1093
00:53:47,840 --> 00:53:48,500
quickly.

1094
00:53:48,500 --> 00:53:51,929
There's also going to be advertising costs, promotional

1095
00:53:51,929 --> 00:53:55,500
costs, security costs, card processing costs.

1096
00:53:55,500 --> 00:53:58,300
Even though we don't have a gas station attendant, about 2

1097
00:53:58,300 --> 00:54:00,829
to 3% of every transaction is going to go to the card

1098
00:54:00,829 --> 00:54:01,500
processors.

1099
00:54:01,500 --> 00:54:03,500
It may be more than that.

1100
00:54:03,500 --> 00:54:05,500
You're absolutely right.

1101
00:54:05,500 --> 00:54:08,829
One of the things that do give me a little bit of concern,

1102
00:54:08,829 --> 00:54:12,179
and maybe I'm just being paranoid, but security is an issue

1103
00:54:12,179 --> 00:54:12,500
.

1104
00:54:12,500 --> 00:54:15,300
You look at some of the gas stations with the skimmers they

1105
00:54:15,300 --> 00:54:18,000
put on there, and to take advantage of the card swipes, we

1106
00:54:18,000 --> 00:54:20,500
're going to have to install security cameras.

1107
00:54:20,500 --> 00:54:23,860
If we're not open 24/7, we're going to need to limit public

1108
00:54:23,860 --> 00:54:24,500
access.

1109
00:54:24,500 --> 00:54:28,650
We also have a number of other facilities out there that,

1110
00:54:28,650 --> 00:54:30,690
you know, our customers are going to understand the

1111
00:54:30,690 --> 00:54:34,500
difference between our CNG pumps and our other fuel pumps.

1112
00:54:34,500 --> 00:54:37,400
That's going to be a challenge that someone rolls up to the

1113
00:54:37,400 --> 00:54:40,239
wrong pump and starts fueling or is frustrated that they

1114
00:54:40,239 --> 00:54:42,500
can't get gas out of a particular pump.

1115
00:54:42,500 --> 00:54:44,460
Again, we're not going to have an attendant down there to

1116
00:54:44,460 --> 00:54:45,500
guide them and tell them.

1117
00:54:45,500 --> 00:54:49,500
Why would we have other kinds of pumps there?

1118
00:54:49,500 --> 00:54:50,500
They're there today.

1119
00:54:50,500 --> 00:54:55,019
Now, we have an alternative fuel island. When you come into

1120
00:54:55,019 --> 00:54:56,659
the entrance of our facility, this would be adding on to

1121
00:54:56,659 --> 00:54:57,500
those existing pumps.

1122
00:54:57,500 --> 00:54:59,500
And then lastly, there's liability concerns.

1123
00:54:59,500 --> 00:55:01,289
I'm not sure what our insurance looks like on the

1124
00:55:01,289 --> 00:55:02,500
alternative fuel station.

1125
00:55:02,500 --> 00:55:04,500
That's something we can go back and take a look at.

1126
00:55:04,500 --> 00:55:07,829
But with having public access to that facility, that's

1127
00:55:07,829 --> 00:55:10,500
something that will need to be reevaluated.

1128
00:55:10,500 --> 00:55:13,309
So with all those, I don't want to presume, but I would

1129
00:55:13,309 --> 00:55:17,019
speculate that $600,000 in grant funds, we will easily

1130
00:55:17,019 --> 00:55:20,119
exceed that with all these additional considerations over

1131
00:55:20,119 --> 00:55:21,500
the next five years.

1132
00:55:21,500 --> 00:55:24,579
And based on that, that's why we as staff are recommending

1133
00:55:24,579 --> 00:55:27,500
we go ahead and push through with the fuel station.

1134
00:55:27,500 --> 00:55:30,840
We use it for city of Denton purposes, return the grant

1135
00:55:30,840 --> 00:55:31,500
funds.

1136
00:55:31,500 --> 00:55:35,610
The nice thing about the fuel station is if market prices

1137
00:55:35,610 --> 00:55:39,500
do return in our favor, this is an option there for us.

1138
00:55:39,500 --> 00:55:43,630
What I recommend upgrading a solid waste truck, the

1139
00:55:43,630 --> 00:55:46,150
operation of those vehicles doesn't make sense unless there

1140
00:55:46,150 --> 00:55:48,500
's a huge difference between CNG and diesel.

1141
00:55:48,500 --> 00:55:51,059
However, light duty vehicles and other vehicles in our

1142
00:55:51,059 --> 00:55:54,280
fleet, we can certainly take a look at and make sure they

1143
00:55:54,280 --> 00:55:56,500
make financial sense if we want to go that route.

1144
00:55:56,500 --> 00:56:01,360
So next steps, we do have this up for council discussion

1145
00:56:01,360 --> 00:56:02,500
tomorrow.

1146
00:56:02,500 --> 00:56:04,630
So whatever your recommendation is, we'll be sure to share

1147
00:56:04,630 --> 00:56:05,500
that with council.

1148
00:56:05,500 --> 00:56:08,300
If we do press forward with the station, we do have a

1149
00:56:08,300 --> 00:56:11,199
couple of things that we need to get back in front of the

1150
00:56:11,199 --> 00:56:12,500
PV and the council.

1151
00:56:12,500 --> 00:56:15,539
One being a gas delivery agreement, which would be the

1152
00:56:15,539 --> 00:56:18,869
transport of the gas through the gas lines, likely through

1153
00:56:18,869 --> 00:56:19,500
Atmos.

1154
00:56:19,500 --> 00:56:22,199
And then also a gas purchase agreement, we'll have to go

1155
00:56:22,199 --> 00:56:24,949
out and secure rights to purchase the gas that we're going

1156
00:56:24,949 --> 00:56:26,500
to use for this facility.

1157
00:56:26,500 --> 00:56:29,420
And if everyone's in agreement with that, we'll also

1158
00:56:29,420 --> 00:56:32,599
initiate the gas line construction and get rolling on that

1159
00:56:32,599 --> 00:56:35,570
so that we can get off of the mobile fueling as quickly as

1160
00:56:35,570 --> 00:56:36,500
possible.

1161
00:56:36,500 --> 00:56:39,980
So with that, I'll be happy to stand for any additional

1162
00:56:39,980 --> 00:56:41,500
questions you have.

1163
00:56:41,500 --> 00:56:42,500
>> Comments?

1164
00:56:42,500 --> 00:56:44,500
Go ahead.

1165
00:56:44,500 --> 00:56:48,329
>> Brendan, has anybody researched if there are any

1166
00:56:48,329 --> 00:56:52,519
compressed natural gas stations available for our use in

1167
00:56:52,519 --> 00:56:53,500
the area?

1168
00:56:53,500 --> 00:56:56,199
>> We've looked into it, I think the closest that we have,

1169
00:56:56,199 --> 00:56:58,530
and I'm going to look at Nick to see if he had a head nod

1170
00:56:58,530 --> 00:56:59,500
or head shake.

1171
00:56:59,500 --> 00:57:00,500
We did approach LAWs.

1172
00:57:00,500 --> 00:57:02,500
We had heard that that was a possibility.

1173
00:57:02,500 --> 00:57:06,429
LOVs, Truck Stop, I believe there's a new facility being

1174
00:57:06,429 --> 00:57:09,500
built off of Loop 288 and I-35.

1175
00:57:09,500 --> 00:57:12,500
My understanding is there's nothing imminent.

1176
00:57:12,500 --> 00:57:14,849
It's not necessarily tied into their roadmap for that

1177
00:57:14,849 --> 00:57:15,500
facility.

1178
00:57:15,500 --> 00:57:17,500
It's just a possibility.

1179
00:57:17,500 --> 00:57:20,579
And so that is one of the things that I would encourage you

1180
00:57:20,579 --> 00:57:23,539
to consider is if we want to hold out and go investigate

1181
00:57:23,539 --> 00:57:26,500
that further, we're certainly happy to do so.

1182
00:57:26,500 --> 00:57:29,389
But what I would say is most every situation we're going to

1183
00:57:29,389 --> 00:57:32,340
encounter, they're going to have the ramp up and build out

1184
00:57:32,340 --> 00:57:33,500
time that we have.

1185
00:57:33,500 --> 00:57:36,139
And for them, they're going to look at it and see if it

1186
00:57:36,139 --> 00:57:37,500
makes financial sense.

1187
00:57:37,500 --> 00:57:40,829
Our understanding is there's no guarantees of any pump

1188
00:57:40,829 --> 00:57:43,500
development in the Denton area right now.

1189
00:57:43,500 --> 00:57:47,860
UPS uses CNG. Do they have a fueling station on Shady Sh

1190
00:57:47,860 --> 00:57:49,500
ores or wherever?

1191
00:57:49,500 --> 00:57:50,500
I'm not sure.

1192
00:57:50,500 --> 00:57:54,639
I know they advertise on the side some of their vehicles

1193
00:57:54,639 --> 00:57:55,500
use CNG.

1194
00:57:55,500 --> 00:57:58,300
I haven't heard that, but we can certainly investigate that

1195
00:57:58,300 --> 00:57:58,500
.

1196
00:57:58,500 --> 00:58:01,860
I would think that those would be some important things to

1197
00:58:01,860 --> 00:58:02,500
look at.

1198
00:58:02,500 --> 00:58:06,539
I would also think we would consider how much would it cost

1199
00:58:06,539 --> 00:58:10,349
to purchase our own mobile fueling truck and fuel them

1200
00:58:10,349 --> 00:58:11,500
ourselves.

1201
00:58:11,500 --> 00:58:13,500
I mean, I know there's mileage and all that.

1202
00:58:13,500 --> 00:58:15,500
There's got to be some kind of break even there.

1203
00:58:15,500 --> 00:58:19,730
But if it's worth it to this other company to do it, then

1204
00:58:19,730 --> 00:58:23,500
it may actually give us a better bottom line.

1205
00:58:23,500 --> 00:58:27,500
That's one of the scenarios we've actually talked about.

1206
00:58:27,500 --> 00:58:31,219
I haven't seen how they construct their per gallon cost or

1207
00:58:31,219 --> 00:58:32,500
cost recovery.

1208
00:58:32,500 --> 00:58:36,119
A big portion of what we pay them, I would imagine, is the

1209
00:58:36,119 --> 00:58:38,500
transportation of the fuel to us.

1210
00:58:38,500 --> 00:58:40,949
But that's definitely something, if that's the direction of

1211
00:58:40,949 --> 00:58:43,239
the board, we're happy to go back and evaluate as an option

1212
00:58:43,239 --> 00:58:43,500
.

1213
00:58:43,500 --> 00:58:45,980
I think it would just be nice to make sure we covered all

1214
00:58:45,980 --> 00:58:49,679
our bases so we made the best choice from all the available

1215
00:58:49,679 --> 00:58:50,500
choices.

1216
00:58:50,500 --> 00:58:53,980
Yeah, I think that that part of the piece of the puzzle

1217
00:58:53,980 --> 00:58:57,500
seems to be the only one profitable at this point.

1218
00:58:57,500 --> 00:59:00,500
Yeah. We'll bring it to you.

1219
00:59:00,500 --> 00:59:05,829
If somebody like Luz or QT, if a retailer doesn't find the

1220
00:59:05,829 --> 00:59:09,739
potential in making money off of it, then it can't be made

1221
00:59:09,739 --> 00:59:11,500
at this point.

1222
00:59:11,500 --> 00:59:15,400
And that's a function of the cost of diesel and what you

1223
00:59:15,400 --> 00:59:16,500
can charge.

1224
00:59:16,500 --> 00:59:26,139
Yeah, I think there's probably, I know you all have looked

1225
00:59:26,139 --> 00:59:32,019
at this every way you can, just want to make sure before we

1226
00:59:32,019 --> 00:59:34,500
bite off a capital expenditure

1227
00:59:34,500 --> 00:59:40,800
that we're not going to, if we're going to be going back

1228
00:59:40,800 --> 00:59:48,590
and leaning more back to diesel, biodiesel fleet, then we

1229
00:59:48,590 --> 00:59:50,500
don't want stranded capital cost out there.

1230
00:59:50,500 --> 00:59:52,500
We may already have it, I don't know.

1231
00:59:52,500 --> 00:59:53,500
Right.

1232
00:59:53,500 --> 00:59:59,130
And, you know, as far as taking, you know, the TCEQ grant,

1233
00:59:59,130 --> 01:00:04,500
I think that we don't really see public sales as viable.

1234
01:00:04,500 --> 01:00:08,500
I don't know that I'm not sure we should have a conscience,

1235
01:00:08,500 --> 01:00:12,929
but in the spirit of the grant, you know, it's for public

1236
01:00:12,929 --> 01:00:13,500
sales.

1237
01:00:13,500 --> 01:00:18,829
If it's really not viable, then that may be something we

1238
01:00:18,829 --> 01:00:20,500
just let it go.

1239
01:00:20,500 --> 01:00:23,389
One of the things I would throw in on public sales is the

1240
01:00:23,389 --> 01:00:25,500
grant requires full public sales.

1241
01:00:25,500 --> 01:00:28,039
If we return the grant, there's nothing that stops us as an

1242
01:00:28,039 --> 01:00:30,769
organization from saying we're going to do public sales on

1243
01:00:30,769 --> 01:00:31,500
our own terms.

1244
01:00:31,500 --> 01:00:32,500
Sure.

1245
01:00:32,500 --> 01:00:34,719
We've had a number of institutions approach our outreach

1246
01:00:34,719 --> 01:00:37,119
department and say, hey, well, how are you guys coming with

1247
01:00:37,119 --> 01:00:37,500
CNG?

1248
01:00:37,500 --> 01:00:42,079
Everyone, to your point about the retail sales, everyone is

1249
01:00:42,079 --> 01:00:44,500
waiting for someone to put in the infrastructure

1250
01:00:44,500 --> 01:00:48,210
because that's the stranded capital that no one's going to

1251
01:00:48,210 --> 01:00:50,500
recover by doing it on their own.

1252
01:00:50,500 --> 01:00:51,500
That's the position that we're in.

1253
01:00:51,500 --> 01:00:54,099
And so if we do complete the facility, we can certainly

1254
01:00:54,099 --> 01:00:55,500
entertain those offers.

1255
01:00:55,500 --> 01:00:58,409
We can approach some institutions like a UPS or DCTA and

1256
01:00:58,409 --> 01:01:00,500
say, hey, we have this facility.

1257
01:01:00,500 --> 01:01:02,500
We're open for business.

1258
01:01:02,500 --> 01:01:04,130
And we could do that on a contract basis if that's

1259
01:01:04,130 --> 01:01:05,500
something we wanted to entertain.

1260
01:01:05,500 --> 01:01:06,500
Yeah.

1261
01:01:06,500 --> 01:01:08,500
It makes it a little bit more controllable for us.

1262
01:01:08,500 --> 01:01:09,500
Yeah, absolutely.

1263
01:01:09,500 --> 01:01:10,500
Barbara?

1264
01:01:10,500 --> 01:01:15,239
If I understand, the reason we considered CNG was because

1265
01:01:15,239 --> 01:01:18,500
it was cleaner and it was more economical.

1266
01:01:18,500 --> 01:01:21,659
And if I understand you now, you're telling us that with

1267
01:01:21,659 --> 01:01:25,300
what they've done with diesel, that it's made it more

1268
01:01:25,300 --> 01:01:26,500
attractive.

1269
01:01:26,500 --> 01:01:28,500
Is that correct?

1270
01:01:28,500 --> 01:01:29,500
I don't want to speak for Dr. Banks.

1271
01:01:29,500 --> 01:01:32,500
I think it really -- can you correct me if I'm wrong?

1272
01:01:32,500 --> 01:01:34,780
It really comes down to what do you want your environmental

1273
01:01:34,780 --> 01:01:35,500
impacts to be?

1274
01:01:35,500 --> 01:01:41,139
I think they're kind of negligible at this point, if I'm

1275
01:01:41,139 --> 01:01:44,500
not speaking on a turn on that.

1276
01:01:44,500 --> 01:01:48,500
And now the finance part of it is not there.

1277
01:01:48,500 --> 01:01:49,500
Right.

1278
01:01:49,500 --> 01:01:50,500
Right.

1279
01:01:50,500 --> 01:01:56,409
And again, the gap has closed substantially between the

1280
01:01:56,409 --> 01:01:58,500
biodiesel and CNG.

1281
01:01:58,500 --> 01:02:03,139
And it really boils down to which environmental impact are

1282
01:02:03,139 --> 01:02:05,500
you more concerned about.

1283
01:02:05,500 --> 01:02:09,289
If you're concerned about the ground level ozone issue, CNG

1284
01:02:09,289 --> 01:02:13,179
is a slightly better performer, but that gap has closed

1285
01:02:13,179 --> 01:02:15,500
substantially since 2012.

1286
01:02:15,500 --> 01:02:18,599
If you're looking at it from a greenhouse gas emissions

1287
01:02:18,599 --> 01:02:23,179
standpoint, CNG is actually a worse platform from that

1288
01:02:23,179 --> 01:02:24,500
perspective than B20 on a --

1289
01:02:24,500 --> 01:02:29,500
especially on the short term, 20 years or so.

1290
01:02:29,500 --> 01:02:33,849
So it's kind of a mixed outcome, but the new diesel

1291
01:02:33,849 --> 01:02:38,199
platforms are not nearly as impacted from an ozone

1292
01:02:38,199 --> 01:02:44,010
standpoint as the ones that we were looking at back in 2012

1293
01:02:44,010 --> 01:02:44,500
.

1294
01:02:44,500 --> 01:02:45,500
Okay. Thank you.

1295
01:02:45,500 --> 01:02:46,500
Sure.

1296
01:02:46,500 --> 01:02:48,500
Hi.

1297
01:02:48,500 --> 01:02:50,500
Yes, Susan.

1298
01:02:50,500 --> 01:02:53,829
Back to the grant, what other hooks do they have

1299
01:02:53,829 --> 01:02:55,500
administratively?

1300
01:02:55,500 --> 01:02:58,869
My experience with grants is they're really not worth the

1301
01:02:58,869 --> 01:02:59,500
money.

1302
01:02:59,500 --> 01:03:02,860
They're just -- you're reporting back to them for 20 years

1303
01:03:02,860 --> 01:03:04,500
or whatever on this grant.

1304
01:03:04,500 --> 01:03:05,500
Yeah.

1305
01:03:05,500 --> 01:03:07,500
We've looked into it.

1306
01:03:07,500 --> 01:03:11,320
I think the major one is that we are dedicated to this for

1307
01:03:11,320 --> 01:03:12,500
three years.

1308
01:03:12,500 --> 01:03:16,050
Now, if we get two years in and decide that we're out, then

1309
01:03:16,050 --> 01:03:19,349
it is prorated in terms of what we would be refunding and

1310
01:03:19,349 --> 01:03:20,500
returning.

1311
01:03:20,500 --> 01:03:24,769
I think the real kickers with this is we could require

1312
01:03:24,769 --> 01:03:29,519
people to register to use the site, but that doesn't limit

1313
01:03:29,519 --> 01:03:30,500
access.

1314
01:03:30,500 --> 01:03:33,889
It is anyone that wants to use it is really -- because when

1315
01:03:33,889 --> 01:03:36,400
we looked at this, we thought if we could restrict public

1316
01:03:36,400 --> 01:03:39,199
use to just those folks that know what they're doing out

1317
01:03:39,199 --> 01:03:41,500
there, that we can get out and train them.

1318
01:03:41,500 --> 01:03:44,030
These are only the pumps that you use and only during these

1319
01:03:44,030 --> 01:03:44,500
hours.

1320
01:03:44,500 --> 01:03:46,820
But with full public access, that brings into a lot of

1321
01:03:46,820 --> 01:03:49,500
those uncertainties and risks that we had talked about.

1322
01:03:49,500 --> 01:03:53,500
And so I'm not sure that there's additional hooks in there.

1323
01:03:53,500 --> 01:03:55,500
I think the three years is the one thing that --

1324
01:03:55,500 --> 01:03:57,500
And then you have to prorate it back.

1325
01:03:57,500 --> 01:03:58,500
Then you have to prorate it back.

1326
01:03:58,500 --> 01:04:01,400
And there are reporting requirements that we would have for

1327
01:04:01,400 --> 01:04:04,150
at least that three-year period that they want to see some

1328
01:04:04,150 --> 01:04:06,500
data on how well this thing is performing.

1329
01:04:06,500 --> 01:04:09,519
And I think back to Randy's point, it is still tax money

1330
01:04:09,519 --> 01:04:11,500
should we really be spending it.

1331
01:04:11,500 --> 01:04:13,500
Right.

1332
01:04:13,500 --> 01:04:16,829
Ethan, can you remind me what the initial assumption was in

1333
01:04:16,829 --> 01:04:19,800
terms of public sales when this concept was initially

1334
01:04:19,800 --> 01:04:20,500
created?

1335
01:04:20,500 --> 01:04:21,500
In terms of revenue generation?

1336
01:04:21,500 --> 01:04:24,500
Yeah.

1337
01:04:24,500 --> 01:04:29,070
An estimate of it was at least $180,000 to $250,000 in the

1338
01:04:29,070 --> 01:04:31,800
first couple of years, and that would balloon up to about

1339
01:04:31,800 --> 01:04:33,500
half a million dollars in the out years.

1340
01:04:33,500 --> 01:04:36,829
I don't think we get anywhere close to scratching that

1341
01:04:36,829 --> 01:04:37,500
surface.

1342
01:04:37,500 --> 01:04:40,300
I don't know off the top of my head what the margin was on

1343
01:04:40,300 --> 01:04:43,500
that, but again, remember, we're buying this at cost.

1344
01:04:43,500 --> 01:04:46,070
We're not going to get a quantity break, and we're also not

1345
01:04:46,070 --> 01:04:48,539
going to see the additional revenues from the sale of the

1346
01:04:48,539 --> 01:04:50,500
twizzlers and beef jerky like QT does.

1347
01:04:50,500 --> 01:04:54,929
And so our profits are going to be solely based on what we

1348
01:04:54,929 --> 01:04:59,500
can realize in terms of the margin on the fuel itself.

1349
01:04:59,500 --> 01:05:02,829
So it's not something that is going to automatically flip

1350
01:05:02,829 --> 01:05:07,150
this picture around for us, unfortunately, it would be my

1351
01:05:07,150 --> 01:05:07,500
guess.

1352
01:05:07,500 --> 01:05:12,829
Yeah, not until there's a price increase, there's a cost

1353
01:05:12,829 --> 01:05:14,500
increase in diesel.

1354
01:05:14,500 --> 01:05:16,500
I mean, right now, it's just too close.

1355
01:05:16,500 --> 01:05:17,500
There's not a demand for it.

1356
01:05:17,500 --> 01:05:18,500
Right.

1357
01:05:18,500 --> 01:05:22,500
For that.

1358
01:05:22,500 --> 01:05:31,500
Okay. Any other questions, comments, direction?

1359
01:05:31,500 --> 01:05:33,500
What's our recommendation?

1360
01:05:33,500 --> 01:05:37,500
So we will continue.

1361
01:05:37,500 --> 01:05:41,289
We'll continue planning the options, and we'll also touch

1362
01:05:41,289 --> 01:05:44,599
base with some of our larger commercial customers here and

1363
01:05:44,599 --> 01:05:48,030
see if there's a possibility of reaching a deal to share

1364
01:05:48,030 --> 01:05:49,500
any infrastructure they might have.

1365
01:05:49,500 --> 01:05:55,500
And as part of that analysis, we'll bring it back.

1366
01:05:55,500 --> 01:05:57,500
Yeah, good.

1367
01:05:57,500 --> 01:06:01,500
Any add ons to that?

1368
01:06:01,500 --> 01:06:02,500
Thank you very much.

1369
01:06:02,500 --> 01:06:08,500
Okay. Thank you.

1370
01:06:08,500 --> 01:06:23,500
Okay.

1371
01:06:23,500 --> 01:06:29,440
Any items, any, any comments or inquiries from the public

1372
01:06:29,440 --> 01:06:34,920
utility board or the public of any clarification on any

1373
01:06:34,920 --> 01:06:40,519
policy or any upcoming meeting or to put place them out on

1374
01:06:40,519 --> 01:06:44,500
the agenda for an upcoming meeting.

1375
01:06:44,500 --> 01:06:46,500
General comments.

1376
01:06:46,500 --> 01:06:48,500
Hearing none.

1377
01:06:48,500 --> 01:06:50,500
Okay.

1378
01:06:50,500 --> 01:06:56,000
All right. At this time, we'll go into closed meeting at 10

1379
01:06:56,000 --> 01:06:56,500
08.