WEBVTT

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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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Okay.

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Motion?

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Move approval.

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Second.

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And a second from Barbara.

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Any discussion?

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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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ACM update.

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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,

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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.

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Any questions on that item?

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Question on this.

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We show water at 9,200 gallons a month and waste at six.

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We actually build that on 100%.

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

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at?

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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.

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Okay.

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Gotcha.

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

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Okay.

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All right.

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That's the only question I had.

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Okay. And the next two items will be presented by Deputy

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City Manager Brian Langley and the Solid Waste Financial

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Internal Control Review and the Energy Management Organiz

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ational Financial Review by Deloitte.

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Okay. Good morning.

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

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proceeding with, really under the city manager's

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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

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so we wanted to spend some time with an outside firm coming

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in to help us to do that.

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And in particular, they're going to be helping us look at

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revenue processing and billing, the purchasing and expense

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processing and authorization, that process, how that's done

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, and how contracts are executed and managed over a period

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of time.

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Those are things, again, that we think we can improve with

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in solid waste, and so we've asked the accounting firm of

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Weaver to come in and do that.

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We've worked with them many times in the past and have

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always done a very good job, and as we work through that

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process and get those results, we'll come back to the PUB

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and council and let you guys know the improvements that we

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're putting in place.

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And kind of in that same vein, we're working with Deloitte

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to help us validate some of the savings associated with the

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energy management organization and the DME. As you know, we

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have our own operation out there buying and selling energy.

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We think this has been very successful. Some of our own

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estimates estimate that we've saved about $13 million

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annually with that operation, but we'd like to have an

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outside firm come in, validate those numbers, validate the

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model used to calculate that, and so we'll be working with

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Deloitte over the next few weeks to do that.

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And again, bringing that back to the PUB and council to

00:14:44.100 --> 00:14:45.500
talk about that process.

00:14:45.500 --> 00:14:48.659
With Deloitte, an additional scope of the work would be

00:14:48.659 --> 00:14:51.820
also to, depending on how it goes for the past two fiscal

00:14:51.820 --> 00:14:54.990
years, would then be to engage them to have a model going

00:14:54.990 --> 00:14:58.649
forward for '17-'18 going forward that we can all agree

00:14:58.649 --> 00:15:00.500
upon and understand.

00:15:00.500 --> 00:15:04.259
So those are my two items, and I'd be happy to answer any

00:15:04.259 --> 00:15:06.500
questions that you may have.

00:15:06.500 --> 00:15:07.500
All right. Thank you, sir.

00:15:07.500 --> 00:15:08.500
Oh, we've got a question.

00:15:08.500 --> 00:15:13.200
I do have a couple questions. How were these organizations

00:15:13.200 --> 00:15:15.500
selected to do these services for us?

00:15:15.500 --> 00:15:19.049
Weaver is, in the case of Weaver, they're a firm that used

00:15:19.049 --> 00:15:22.330
to be our audit firm. We switched to a different firm in

00:15:22.330 --> 00:15:24.990
the last year or so, so we have a lot of experience with

00:15:24.990 --> 00:15:27.460
that firm, and in particular with a partner over the risk

00:15:27.460 --> 00:15:28.500
advisory services.

00:15:28.500 --> 00:15:31.340
I've used them many times in the past to help us with some

00:15:31.340 --> 00:15:33.830
internal audit type work, and so we have a lot of

00:15:33.830 --> 00:15:35.500
experience with that firm.

00:15:35.500 --> 00:15:39.850
For Deloitte, we looked at several different firms in that

00:15:39.850 --> 00:15:42.970
business and space of firms that have experience in that

00:15:42.970 --> 00:15:45.299
area and the technical knowledge to actually make those

00:15:45.299 --> 00:15:46.500
kinds of calculations.

00:15:46.500 --> 00:15:48.500
In Deloitte, in our opinion, really was the best fit.

00:15:48.500 --> 00:15:51.500
And when you say "we" and "are," who were you?

00:15:51.500 --> 00:15:53.500
The city manager and I and our staff.

00:15:53.500 --> 00:15:54.500
Yes, sir.

00:15:54.500 --> 00:15:55.500
Thank you.

00:15:55.500 --> 00:15:56.500
You're welcome.

00:15:56.500 --> 00:15:57.500
Okay.

00:15:57.500 --> 00:15:58.500
All right. Thank you.

00:15:58.500 --> 00:15:59.500
Thank you, Brian.

00:15:59.500 --> 00:16:01.500
You're welcome.

00:16:01.500 --> 00:16:06.080
And then on the new business matrix, there's nothing to

00:16:06.080 --> 00:16:10.759
report, nothing to update the board on, unless you have

00:16:10.759 --> 00:16:13.500
items that you'd like to add.

00:16:13.500 --> 00:16:15.500
Oh, yes, Barbara.

00:16:15.500 --> 00:16:21.409
I know that we've got the staging area on Loop 288 is going

00:16:21.409 --> 00:16:26.960
away. Are we moving to another site now to be more geograph

00:16:26.960 --> 00:16:32.500
ically located toward the work that's going to be done?

00:16:32.500 --> 00:16:38.120
I don't know at this point. Let me check and get back to

00:16:38.120 --> 00:16:40.500
the board.

00:16:40.500 --> 00:16:45.500
You're talking about the substation construction site?

00:16:45.500 --> 00:16:53.500
Yeah, the staging area where they piled all their stuff.

00:16:53.500 --> 00:17:00.220
Hearing nothing else then, that's all we have for the ACM

00:17:00.220 --> 00:17:01.500
update.

00:17:01.500 --> 00:17:06.829
Our next part of the meeting is a work session where we

00:17:06.829 --> 00:17:11.750
will receive a report, hold a discussion, and provide a

00:17:11.750 --> 00:17:17.750
recommendation regarding compressed natural gas, CNG, fuel

00:17:17.750 --> 00:17:20.970
ing facility at the intersection of Mayhill Road and Spitzer

00:17:20.970 --> 00:17:21.500
Road.

00:17:21.500 --> 00:17:24.569
Good morning. My name is Ethan Cox. I'm the director of

00:17:24.569 --> 00:17:25.500
solid waste.

00:17:25.500 --> 00:17:27.500
Pleasure to bring this item to you this morning.

00:17:27.500 --> 00:17:30.099
So I have a brief presentation to kind of give you an

00:17:30.099 --> 00:17:32.829
update on where solid waste is with our CNG fueling

00:17:32.829 --> 00:17:36.759
facility, as well as try to seek some direction on how the

00:17:36.759 --> 00:17:40.549
board would prefer that we pursue our options moving

00:17:40.549 --> 00:17:41.500
forward.

00:17:41.500 --> 00:17:45.569
So I'm not sure how well versed everyone is in our history

00:17:45.569 --> 00:17:46.500
with CNG.

00:17:46.500 --> 00:17:49.490
So compressed natural gas is an alternative fueling

00:17:49.490 --> 00:17:52.680
platform that you can certainly implement on any type of

00:17:52.680 --> 00:17:53.500
vehicle.

00:17:53.500 --> 00:17:56.799
It comes in handy whenever fuel prices get a little bit out

00:17:56.799 --> 00:17:59.750
of hand because CNG traditionally has been a little bit

00:17:59.750 --> 00:18:02.599
lower on a per gallon basis than say diesel or regular

00:18:02.599 --> 00:18:03.500
gasoline.

00:18:03.500 --> 00:18:06.099
That was certainly the case back in 2012. That was the

00:18:06.099 --> 00:18:08.859
first report to the Public Utilities Board and the City

00:18:08.859 --> 00:18:10.500
Council by solid waste staff.

00:18:10.500 --> 00:18:14.670
Those talks intensified in the summer of 2013 and staff

00:18:14.670 --> 00:18:18.369
received direction from both the PUB and the City Council

00:18:18.369 --> 00:18:21.759
to go ahead and start pursuing public sales as well as

00:18:21.759 --> 00:18:24.500
changing our fleet over to CNG vehicles.

00:18:24.500 --> 00:18:27.829
Around that fall, solid waste staff actually went and

00:18:27.829 --> 00:18:31.220
negotiated with the firm to implement a CNG fueling station

00:18:31.220 --> 00:18:31.500
.

00:18:31.500 --> 00:18:34.500
Unfortunately, those talks fell apart shortly thereafter.

00:18:34.500 --> 00:18:38.940
And in the spring of 2014, April 2014, the department

00:18:38.940 --> 00:18:42.500
entered into a temporary fueling contract for mobile CNG

00:18:42.500 --> 00:18:46.180
fueling with the firm called Ultimate CNG or UCNG as you

00:18:46.180 --> 00:18:47.500
see on the slide.

00:18:47.500 --> 00:18:49.640
That initial contract was for a period of three years. It

00:18:49.640 --> 00:18:52.829
was kind of a holdover until we got the facility

00:18:52.829 --> 00:18:53.500
constructed.

00:18:53.500 --> 00:18:57.619
However, because project has not come along, I think the

00:18:57.619 --> 00:18:59.500
way staff saw it would.

00:18:59.500 --> 00:19:02.549
We've had to do two separate amendments for UCNG. So what

00:19:02.549 --> 00:19:05.250
started out as a hundred and twenty thousand dollar

00:19:05.250 --> 00:19:08.200
contract over a three year period has now ballooned up to

00:19:08.200 --> 00:19:10.500
about one point nine million dollars.

00:19:10.500 --> 00:19:13.900
So where we stand today, August 2016, the Public Utilities

00:19:13.900 --> 00:19:17.109
Board and also the City Council, asked was received a

00:19:17.109 --> 00:19:21.180
presentation from the Solid Waste Department and we awarded

00:19:21.180 --> 00:19:24.519
a contract to Zide Energy for the construction of the fuel

00:19:24.519 --> 00:19:25.500
ing station.

00:19:25.500 --> 00:19:28.099
That project is moving forward. What we wanted to do today

00:19:28.099 --> 00:19:30.359
is get in front of you and share some of the financial

00:19:30.359 --> 00:19:32.500
information that we've evaluated on this.

00:19:32.500 --> 00:19:36.730
We really have some decisions to make on how that station

00:19:36.730 --> 00:19:40.779
is going to be set up and how we're going to proceed from

00:19:40.779 --> 00:19:41.500
here.

00:19:41.500 --> 00:19:44.650
After the award design, the Solid Waste Department also

00:19:44.650 --> 00:19:47.769
applied for a six hundred thousand dollar grant from the

00:19:47.769 --> 00:19:50.500
Texas Commission on Environmental Quality.

00:19:50.500 --> 00:19:53.210
We received that grant that was essentially for the

00:19:53.210 --> 00:19:56.500
purchase of equipment to go into the CNG fueling facility.

00:19:56.500 --> 00:19:58.500
That did come with some stipulations, though.

00:19:58.500 --> 00:20:01.390
It required that the Solid Waste Department make public

00:20:01.390 --> 00:20:04.500
sales available for a period of no less than three years.

00:20:04.500 --> 00:20:07.299
And we say public sales. That's not contracting on an

00:20:07.299 --> 00:20:11.500
individual basis. That is full public sales.

00:20:11.500 --> 00:20:14.829
With that, there's also requirements for when the public

00:20:14.829 --> 00:20:16.500
can access that facility.

00:20:16.500 --> 00:20:18.849
It has to be no less than Monday through Friday at a

00:20:18.849 --> 00:20:20.500
minimum of eight hours a day.

00:20:20.500 --> 00:20:23.200
We can always go more than that if we wanted to, but we

00:20:23.200 --> 00:20:26.170
have to make sure that we at least have that available then

00:20:26.170 --> 00:20:26.500
.

00:20:26.500 --> 00:20:29.829
Somewhat in our favor, we don't have to have someone

00:20:29.829 --> 00:20:32.500
staffing that as a gas station attendant.

00:20:32.500 --> 00:20:34.950
We do have some pumps that come equipped with credit card

00:20:34.950 --> 00:20:38.880
readers. And so that does have some operational advantages

00:20:38.880 --> 00:20:39.500
to us.

00:20:39.500 --> 00:20:43.359
But I'll go through later in the presentation some of the

00:20:43.359 --> 00:20:46.500
challenges we see with with public sales.

00:20:46.500 --> 00:20:49.829
So what's happened since 2012 whenever this item was

00:20:49.829 --> 00:20:52.500
initially pitched to the P.B. and council?

00:20:52.500 --> 00:20:55.849
Well, obviously, all of us felt that the pump see probably

00:20:55.849 --> 00:20:59.160
seen a slight difference in gas prices between now and then

00:20:59.160 --> 00:20:59.500
.

00:20:59.500 --> 00:21:02.900
So in 2012, diesel was running about three dollars and

00:21:02.900 --> 00:21:06.009
seventy cents per gallon. CNG was at two dollars and twelve

00:21:06.009 --> 00:21:06.500
cents.

00:21:06.500 --> 00:21:08.819
There's about a dollar fifty eight cents per gallon

00:21:08.819 --> 00:21:11.250
difference between those two at the time that this was

00:21:11.250 --> 00:21:12.500
initially conceived.

00:21:12.500 --> 00:21:17.059
Fast forward to this last April. These are spot prices in

00:21:17.059 --> 00:21:21.069
that margin to shrink down to about twelve cents per gallon

00:21:21.069 --> 00:21:22.500
between CNG and diesel.

00:21:22.500 --> 00:21:26.130
And so there's very little cost advantage to running a CNG

00:21:26.130 --> 00:21:28.500
vehicle versus a diesel vehicle.

00:21:28.500 --> 00:21:32.849
The curious thing around this change in price is that the

00:21:32.849 --> 00:21:37.349
operation continued despite the changes in fuel prices to

00:21:37.349 --> 00:21:39.500
invest in CNG vehicles.

00:21:39.500 --> 00:21:43.049
We had about five to eight CNG vehicles in 2013. We have

00:21:43.049 --> 00:21:44.500
twenty four now.

00:21:44.500 --> 00:21:48.049
The cost to upgrade a CNG vehicle runs about forty thousand

00:21:48.049 --> 00:21:49.500
dollars on average.

00:21:49.500 --> 00:21:53.069
And so that's essentially the amount of money that you've

00:21:53.069 --> 00:21:56.710
got to recover from the difference in price between CNG and

00:21:56.710 --> 00:21:57.500
diesel.

00:21:57.500 --> 00:22:00.299
Another challenging thing that we've encountered over the

00:22:00.299 --> 00:22:02.829
last four years is again, we don't have our fueling

00:22:02.829 --> 00:22:03.500
facility built.

00:22:03.500 --> 00:22:07.069
And so the department has been contracted with Ultimate CNG

00:22:07.069 --> 00:22:08.500
for mobile fueling.

00:22:08.500 --> 00:22:11.299
The price per gallon using that fueling method is about

00:22:11.299 --> 00:22:14.500
three dollars and seventy five cents per gallon on average.

00:22:14.500 --> 00:22:17.359
And so that's far and above any of the fuel prices that we

00:22:17.359 --> 00:22:19.500
've seen in the last five to six years.

00:22:19.500 --> 00:22:23.640
Diesel or CNG. In addition, that six hundred thousand

00:22:23.640 --> 00:22:25.990
dollar grant, about two hundred one thousand dollars of

00:22:25.990 --> 00:22:26.500
that has been expended.

00:22:26.500 --> 00:22:30.240
We have equipment on the ground now, fuel pumps, things of

00:22:30.240 --> 00:22:32.500
that nature that are ready to go.

00:22:32.500 --> 00:22:35.309
But again, we're going to be coming back to the city

00:22:35.309 --> 00:22:38.650
council and the P.U.B. with some purchasing type items for

00:22:38.650 --> 00:22:41.500
gas transportation and the installation of a fuel line.

00:22:41.500 --> 00:22:45.089
We wanted to have this discussion with you before we start

00:22:45.089 --> 00:22:47.500
pushing forward with those items.

00:22:47.500 --> 00:22:49.500
So I had a slide that you don't have in your backup here.

00:22:49.500 --> 00:22:51.500
Hopefully you can see this.

00:22:51.500 --> 00:22:54.829
There's a website called CNG one that allows you to do kind

00:22:54.829 --> 00:22:57.960
of some quick and dirty analysis on what my payback period

00:22:57.960 --> 00:22:58.500
is.

00:22:58.500 --> 00:23:01.500
I'm contemplating a CNG vehicle.

00:23:01.500 --> 00:23:04.500
So I'll walk you through what this looked like in 2012 and

00:23:04.500 --> 00:23:06.890
I'll walk you through what it looks like with today's

00:23:06.890 --> 00:23:07.500
prices.

00:23:07.500 --> 00:23:10.829
So if you'll kind of follow my mouse up here, we're going

00:23:10.829 --> 00:23:13.500
to be doing this analysis for one vehicle.

00:23:13.500 --> 00:23:15.799
On average, we're just going to say we're going to have

00:23:15.799 --> 00:23:18.250
about ten thousand miles per year for a solid waste vehicle

00:23:18.250 --> 00:23:18.500
.

00:23:18.500 --> 00:23:21.539
We're probably going to run between ten, twenty thousand

00:23:21.539 --> 00:23:23.500
miles per year on those vehicles.

00:23:23.500 --> 00:23:26.829
Solid waste trucks are notoriously poor in terms of fuel

00:23:26.829 --> 00:23:27.500
economy.

00:23:27.500 --> 00:23:31.500
So three miles per gallon is not far off the mark.

00:23:31.500 --> 00:23:35.410
The price at the time in 2012 was three seventy CNG at the

00:23:35.410 --> 00:23:39.160
time was two twelve and the conversion cost, as I mentioned

00:23:39.160 --> 00:23:41.500
, is about forty thousand dollars.

00:23:41.500 --> 00:23:44.500
The payback period, if you kind of circle back over here,

00:23:44.500 --> 00:23:47.500
we have about five thousand dollars in annual savings.

00:23:47.500 --> 00:23:51.049
The payback period, given those assumptions, is about seven

00:23:51.049 --> 00:23:52.500
point five nine years.

00:23:52.500 --> 00:23:55.589
Now, that's important. This is what I would deem as best

00:23:55.589 --> 00:23:58.500
condition under CNG and diesel prices.

00:23:58.500 --> 00:24:01.930
We haven't seen the price difference at a dollar fifty

00:24:01.930 --> 00:24:04.500
eight essentially since that time.

00:24:04.500 --> 00:24:07.500
The seven point five nine year payback period.

00:24:07.500 --> 00:24:09.980
Most of our solid waste trucks age out at five to seven

00:24:09.980 --> 00:24:10.500
years.

00:24:10.500 --> 00:24:13.519
So even under best conditions, you're probably not recapt

00:24:13.519 --> 00:24:16.500
uring your capital investment on your vehicle alone.

00:24:16.500 --> 00:24:19.410
The contract with Zide Energy is a two point seven million

00:24:19.410 --> 00:24:21.500
dollar investment into the station.

00:24:21.500 --> 00:24:24.079
And so the only way that you're going to pay back your

00:24:24.079 --> 00:24:26.500
station is with significant public sales.

00:24:26.500 --> 00:24:28.500
And that's under best conditions.

00:24:28.500 --> 00:24:32.369
We fast forward to twenty seventeen and all the assumptions

00:24:32.369 --> 00:24:35.849
are held the same except for our diesel cost and our gas

00:24:35.849 --> 00:24:36.500
cost.

00:24:36.500 --> 00:24:39.130
So, again, that's only a twelve cents spread between those

00:24:39.130 --> 00:24:39.500
two.

00:24:39.500 --> 00:24:42.500
The payback period balloons to a hundred years.

00:24:42.500 --> 00:24:44.940
I've only been in solid waste a short period of time, but I

00:24:44.940 --> 00:24:47.369
don't think we have any vehicles that have been in service

00:24:47.369 --> 00:24:48.500
for a hundred years.

00:24:48.500 --> 00:24:51.890
And so the point of this is that the investments that we've

00:24:51.890 --> 00:24:55.500
made, it's unlikely that we're going to recover those.

00:24:55.500 --> 00:24:58.640
Really, what we want to give you a look at today is what is

00:24:58.640 --> 00:25:02.819
our best option moving forward to try to either recoup some

00:25:02.819 --> 00:25:06.500
of our costs or escape from the conversion to CNG.

00:25:06.500 --> 00:25:13.869
Question. Yes, sir. I know for simplicity to make it ten

00:25:13.869 --> 00:25:14.500
thousand miles.

00:25:14.500 --> 00:25:18.210
But realistically, do we have any vehicles that only have

00:25:18.210 --> 00:25:20.500
ten thousand miles a year put on?

00:25:20.500 --> 00:25:23.849
We run about 40 to 50 miles per day is what staff shared

00:25:23.849 --> 00:25:24.500
with me.

00:25:24.500 --> 00:25:28.500
And so you could technically be under ten thousand miles.

00:25:28.500 --> 00:25:30.170
We may have some that go up to twenty thousand miles per

00:25:30.170 --> 00:25:30.500
year.

00:25:30.500 --> 00:25:33.599
So we can certainly run this scenario with a few other

00:25:33.599 --> 00:25:34.500
variables.

00:25:34.500 --> 00:25:37.500
The principles remain the same is your payback period.

00:25:37.500 --> 00:25:39.470
If we run this out at twenty thousand, thirty thousand

00:25:39.470 --> 00:25:41.500
miles, you're probably going to cut this in half.

00:25:41.500 --> 00:25:44.299
And in that scenario, you would have some payback and you

00:25:44.299 --> 00:25:46.880
would be able to pay down some of your other investments

00:25:46.880 --> 00:25:49.519
and investment at two point seven million dollars over

00:25:49.519 --> 00:25:50.500
twenty years.

00:25:50.500 --> 00:25:54.220
It's you would have to maintain something like this dollar

00:25:54.220 --> 00:25:57.500
fifty eight spread to see that actually happen.

00:25:57.500 --> 00:26:02.500
And with fuel prices where they are, it's very unstable.

00:26:02.500 --> 00:26:07.089
We ran some sensitivity analysis on the differences between

00:26:07.089 --> 00:26:08.500
CNG and diesel.

00:26:08.500 --> 00:26:12.450
We're 95 percent certain that the max that you would see in

00:26:12.450 --> 00:26:16.500
terms of difference is about seventy five cents per gallon.

00:26:16.500 --> 00:26:19.480
And that's based on the three year historical gas prices

00:26:19.480 --> 00:26:21.500
that can be blown out of the water.

00:26:21.500 --> 00:26:24.829
But understanding that trying to sustain a dollar fifty

00:26:24.829 --> 00:26:28.109
eight percent gallon difference between diesel and CNG over

00:26:28.109 --> 00:26:30.990
a 20 year period, I wouldn't be comfortable making that

00:26:30.990 --> 00:26:31.500
assumption.

00:26:31.500 --> 00:26:35.859
How come you didn't use the three dollars and seventy five

00:26:35.859 --> 00:26:39.829
cents per gallon for mobile fueling instead of the we

00:26:39.829 --> 00:26:41.500
certainly could.

00:26:41.500 --> 00:26:43.500
I mean, that's what we're actually paying.

00:26:43.500 --> 00:26:45.500
We're not really paying to 15.

00:26:45.500 --> 00:26:46.500
That's correct.

00:26:46.500 --> 00:26:48.500
I mean, this is this is pretty close.

00:26:48.500 --> 00:26:50.500
But again, this is looking at a payback period.

00:26:50.500 --> 00:26:55.500
We know we're operating at a loss right now for the UCNG.

00:26:55.500 --> 00:26:57.920
If you're interested in seeing that, we can certainly go

00:26:57.920 --> 00:27:00.500
back and run that through over the next couple of slides.

00:27:00.500 --> 00:27:03.390
I will show you kind of through a pro forma what the

00:27:03.390 --> 00:27:05.500
financial outlook looks like.

00:27:05.500 --> 00:27:10.500
And so hopefully we'll answer that question.

00:27:10.500 --> 00:27:12.500
OK, thank you.

00:27:12.500 --> 00:27:14.279
So in the next couple of slides, we do have some pro formas

00:27:14.279 --> 00:27:14.500
.

00:27:14.500 --> 00:27:16.920
I want to walk through this, make sure that everyone

00:27:16.920 --> 00:27:19.369
understands kind of how these are laid out before we dig

00:27:19.369 --> 00:27:20.500
into the numbers.

00:27:20.500 --> 00:27:23.829
So with any pro forma, you're going to have your revenues,

00:27:23.829 --> 00:27:26.500
your expenditures, your net income or loss.

00:27:26.500 --> 00:27:29.500
In addition to that, one of the things that we've added in

00:27:29.500 --> 00:27:33.009
here is fuel cost savings for the purpose of these pro

00:27:33.009 --> 00:27:36.500
forma is we're comparing these to a baseline fuel cost.

00:27:36.500 --> 00:27:39.869
So everything on this slide is what our options are versus

00:27:39.869 --> 00:27:42.500
market price, the spot rate for diesel.

00:27:42.500 --> 00:27:45.500
And so down to the net income or loss, this is what we're

00:27:45.500 --> 00:27:48.500
projecting for the next five years on our options.

00:27:48.500 --> 00:27:51.829
The fuel cost and savings is really kind of a soft cost

00:27:51.829 --> 00:27:52.500
savings.

00:27:52.500 --> 00:27:55.500
And I'll explain that a little more when we get there.

00:27:55.500 --> 00:27:58.410
We've looked at four different scenarios in terms of what

00:27:58.410 --> 00:28:00.500
are our best options moving forward.

00:28:00.500 --> 00:28:03.500
Number one here in this column says mobile fueling.

00:28:03.500 --> 00:28:05.500
That is what we are currently doing.

00:28:05.500 --> 00:28:08.299
That is the three dollars and seventy five cents per gallon

00:28:08.299 --> 00:28:08.500
.

00:28:08.500 --> 00:28:12.490
Number two is retrofit and convert our entire twenty four

00:28:12.490 --> 00:28:14.500
vehicle fleet to diesel.

00:28:14.500 --> 00:28:16.890
We kind of looked at that and said, how do we get out of

00:28:16.890 --> 00:28:18.500
this the fastest way possible?

00:28:18.500 --> 00:28:20.500
That's what that represents.

00:28:20.500 --> 00:28:23.410
Number three and number four, both of those contemplate

00:28:23.410 --> 00:28:28.180
building the alternative fuel station as was approved by

00:28:28.180 --> 00:28:30.500
the PUB and council last August.

00:28:30.500 --> 00:28:33.210
In those, the only difference between options three and

00:28:33.210 --> 00:28:35.500
options for option three is for our use only.

00:28:35.500 --> 00:28:38.500
Option four is for public sales.

00:28:38.500 --> 00:28:44.599
And so with all of these, we have revenues up here that we

00:28:44.599 --> 00:28:46.950
do recognize city of Denton fuel sales for options three

00:28:46.950 --> 00:28:48.500
and options for.

00:28:48.500 --> 00:28:51.400
But we do not recognize public fuel sales because even if

00:28:51.400 --> 00:28:54.500
we offer those, we believe those to be very de minimis.

00:28:54.500 --> 00:28:57.450
We have a number of factors working against us that kind of

00:28:57.450 --> 00:29:00.279
give us pause to have any projection for revenue that we

00:29:00.279 --> 00:29:01.500
feel confident in.

00:29:01.500 --> 00:29:03.500
So let me walk through this real quickly.

00:29:03.500 --> 00:29:06.829
We mentioned that we had the two hundred one thousand

00:29:06.829 --> 00:29:10.500
dollars from this TCEQ grant that we've already expended.

00:29:10.500 --> 00:29:12.759
If we are not going to offer public sales, we would need to

00:29:12.759 --> 00:29:13.500
return that.

00:29:13.500 --> 00:29:14.500
We need to refund it.

00:29:14.500 --> 00:29:16.859
And so that's why this is a negative in these first three

00:29:16.859 --> 00:29:19.500
scenarios, because we're not offering public sales.

00:29:19.500 --> 00:29:24.000
Under the expenditure side, this is really just a mix of

00:29:24.000 --> 00:29:27.500
fuel purchases, operations and maintenance.

00:29:27.500 --> 00:29:30.380
And then you have some debt service down here on those last

00:29:30.380 --> 00:29:32.500
two lines that say CNG station in line.

00:29:32.500 --> 00:29:33.500
We do have some sunk cost.

00:29:33.500 --> 00:29:35.480
We have equipment on the ground that we've already

00:29:35.480 --> 00:29:36.500
purchased with debt.

00:29:36.500 --> 00:29:39.500
We also have the incremental truck cost.

00:29:39.500 --> 00:29:41.509
There's those twenty four vehicles at forty thousand

00:29:41.509 --> 00:29:43.500
dollars each that we've paid for the upgrade on.

00:29:43.500 --> 00:29:46.500
So that's what's represented in that line.

00:29:46.500 --> 00:29:47.500
So let's take scenario one.

00:29:47.500 --> 00:29:51.500
We run this out over the next five years.

00:29:51.500 --> 00:29:53.650
If we do nothing, if we stay with the mobile fueling

00:29:53.650 --> 00:29:56.470
platform, which we would not recommend, we're looking at a

00:29:56.470 --> 00:30:00.500
loss of about four million four point one million dollars.

00:30:00.500 --> 00:30:03.650
When we add in the difference, Brandon, to your point a

00:30:03.650 --> 00:30:06.089
moment ago, what is the difference between the three

00:30:06.089 --> 00:30:08.500
seventy five per gallon that we're paying versus diesel?

00:30:08.500 --> 00:30:11.609
It's about one point nine million dollars over the next

00:30:11.609 --> 00:30:12.500
five years.

00:30:12.500 --> 00:30:15.500
So it is a significant difference.

00:30:15.500 --> 00:30:18.930
So all that totaled out, you get about a six million dollar

00:30:18.930 --> 00:30:19.500
loss.

00:30:19.500 --> 00:30:22.500
Option number two is retrofit and convert to diesel.

00:30:22.500 --> 00:30:25.440
Again, we're eliminating most of the CNG cost here except

00:30:25.440 --> 00:30:26.500
for our sunk cost.

00:30:26.500 --> 00:30:30.130
But one item here, the incremental truck cost, we we we're

00:30:30.130 --> 00:30:32.500
not confident in this projection.

00:30:32.500 --> 00:30:34.460
We can certainly sharpen our pencils on this if you want

00:30:34.460 --> 00:30:35.500
some additional detail.

00:30:35.500 --> 00:30:38.829
But to reconvert a CNG vehicle back to diesel is going to

00:30:38.829 --> 00:30:41.500
run fifty to eighty thousand dollars each.

00:30:41.500 --> 00:30:43.819
And one of the reasons why we would not recommend that

00:30:43.819 --> 00:30:45.950
option is because we don't know what that truck's

00:30:45.950 --> 00:30:48.430
performance is going to look like after we've we've done

00:30:48.430 --> 00:30:49.500
that conversion.

00:30:49.500 --> 00:30:52.630
We think it's going to require some significant work and we

00:30:52.630 --> 00:30:55.819
may be better off just totally replacing the vehicles ahead

00:30:55.819 --> 00:30:56.500
of time.

00:30:56.500 --> 00:31:00.500
So that brings you to a two point five million dollar loss.

00:31:00.500 --> 00:31:05.500
Station option three station for COD use only.

00:31:05.500 --> 00:31:08.000
The only difference between option three and option four is

00:31:08.000 --> 00:31:10.500
the grant funds of about six hundred thousand dollars.

00:31:10.500 --> 00:31:13.359
So in this scenario we'd be refunding our portion of the

00:31:13.359 --> 00:31:16.240
grant and we would not be realizing the remainder as you

00:31:16.240 --> 00:31:17.500
have an option for.

00:31:17.500 --> 00:31:20.089
And so you get about a one point four million dollar loss

00:31:20.089 --> 00:31:21.500
compared to diesel here.

00:31:21.500 --> 00:31:25.259
One point one overall because you do get some price break

00:31:25.259 --> 00:31:28.500
for CNG to diesel in both of these scenarios.

00:31:28.500 --> 00:31:30.140
And again if you do public sales you realize the grant

00:31:30.140 --> 00:31:30.500
funds.

00:31:30.500 --> 00:31:35.500
So that's down to about five hundred twenty seven thousand.

00:31:35.500 --> 00:31:37.500
I know that's a lot of information to take in.

00:31:37.500 --> 00:31:41.450
Are there any questions on any of the assumptions or any of

00:31:41.450 --> 00:31:43.500
the calculations in here?

00:31:43.500 --> 00:31:46.500
What's the cost of the truck?

00:31:46.500 --> 00:31:48.500
I may need a little bit of help on that.

00:31:48.500 --> 00:31:51.500
Nick do you do you know off the top of your head?

00:31:51.500 --> 00:32:01.200
I'd say around roll off trucks are around one hundred and

00:32:01.200 --> 00:32:08.500
sixty to one hundred eighty front loaders.

00:32:08.500 --> 00:32:10.500
Questions?

00:32:10.500 --> 00:32:11.500
All right.

00:32:11.500 --> 00:32:15.500
I've got a question on fuel cost savings.

00:32:15.500 --> 00:32:19.950
So if we're looking at a bottom line let's say let's take

00:32:19.950 --> 00:32:23.500
number three here of one point one million.

00:32:23.500 --> 00:32:29.410
What what would the price of diesel have to be to bring the

00:32:29.410 --> 00:32:35.190
fuel cost savings to say cut that in half and maybe get it

00:32:35.190 --> 00:32:41.500
to where the word public sales would be per gallon.

00:32:41.500 --> 00:32:43.500
We have to go back and look at that now.

00:32:43.500 --> 00:32:46.559
Now under this analysis the assumptions that we have under

00:32:46.559 --> 00:32:49.650
fuel cost savings is a difference of about twenty two cents

00:32:49.650 --> 00:32:50.500
per gallon.

00:32:50.500 --> 00:32:53.829
Like I said we did some sensitivity analysis that got it up

00:32:53.829 --> 00:32:55.500
to seventy five cents a gallon.

00:32:55.500 --> 00:32:58.369
In the scenarios that we ran I don't think that we had

00:32:58.369 --> 00:33:01.500
anything that would have covered our losses here.

00:33:01.500 --> 00:33:05.500
Now if you want to cut that in half.

00:33:05.500 --> 00:33:06.500
Yeah I'm just trying to see.

00:33:06.500 --> 00:33:10.119
If you're looking at about three times the difference you'd

00:33:10.119 --> 00:33:13.589
be about sixty sixty six cents difference between diesel

00:33:13.589 --> 00:33:16.500
and CNG to cut that in half is what I would guess.

00:33:16.500 --> 00:33:19.869
In option number four then the only difference is the full

00:33:19.869 --> 00:33:20.500
grant.

00:33:20.500 --> 00:33:21.500
Correct.

00:33:21.500 --> 00:33:23.500
And we're assuming there's no public sales.

00:33:23.500 --> 00:33:24.500
That's correct.

00:33:24.500 --> 00:33:25.500
Okay.

00:33:25.500 --> 00:33:26.500
I want to make sure that's.

00:33:26.500 --> 00:33:29.579
One of the things I will mention with public sales and I'll

00:33:29.579 --> 00:33:32.670
talk more about this in a few slides is we're not confident

00:33:32.670 --> 00:33:34.500
in the expenses listed here.

00:33:34.500 --> 00:33:36.779
We think there's going to be additional expense beyond what

00:33:36.779 --> 00:33:37.500
we projected.

00:33:37.500 --> 00:33:39.500
Devils in the details with this type of stuff.

00:33:39.500 --> 00:33:42.500
None of us have ever run a gas station.

00:33:42.500 --> 00:33:45.500
And so we are somewhat inexperienced in this.

00:33:45.500 --> 00:33:48.319
And so I'll kind of run through a few of those things in a

00:33:48.319 --> 00:33:49.500
couple of slides.

00:33:49.500 --> 00:33:52.329
Some potential gotchas with public sales that we may not

00:33:52.329 --> 00:33:53.500
have anticipated.

00:33:53.500 --> 00:33:55.500
Just one more question.

00:33:55.500 --> 00:34:01.500
Is CNG fuel cleaner than diesel?

00:34:01.500 --> 00:34:04.039
For that I've had Dr. Banks help me out a little bit with

00:34:04.039 --> 00:34:04.500
this.

00:34:04.500 --> 00:34:12.559
Kenny do you want to talk a little bit about the

00:34:12.559 --> 00:34:20.500
environmental differences between the two.

00:34:20.500 --> 00:34:24.500
So I thought that question might come up.

00:34:24.500 --> 00:34:29.500
And so I put together a presentation on it.

00:34:29.500 --> 00:34:33.500
Not an easy question to answer.

00:34:33.500 --> 00:34:39.500
And I'll kind of walk through how I try to analyze it.

00:34:39.500 --> 00:34:41.219
There's a lot of new software programs that are out right

00:34:41.219 --> 00:34:41.500
now.

00:34:41.500 --> 00:34:45.739
Argonne laboratories has been running a program called

00:34:45.739 --> 00:34:46.500
greet.

00:34:46.500 --> 00:34:49.559
Which is the greenhouse gas regulated emission and energy

00:34:49.559 --> 00:34:51.500
use and transportation program.

00:34:51.500 --> 00:34:55.070
And one of the interesting parts about this is that this

00:34:55.070 --> 00:34:59.179
particular program is used to perform what's referred to as

00:34:59.179 --> 00:35:01.500
wells to wheels analysis.

00:35:01.500 --> 00:35:04.960
So there's several different components of operation of a

00:35:04.960 --> 00:35:09.159
vehicle and evaluating the environmental impacts of a fuel

00:35:09.159 --> 00:35:09.500
platform.

00:35:09.500 --> 00:35:12.389
And so you've got the actual environmental impacts

00:35:12.389 --> 00:35:15.500
associated with obtaining the fuel and processing that fuel

00:35:15.500 --> 00:35:18.500
and delivering that fuel to a pump.

00:35:18.500 --> 00:35:22.849
You've got the component from the pump to the use in the

00:35:22.849 --> 00:35:24.500
vehicle itself.

00:35:24.500 --> 00:35:27.989
And then you've got the sum of those two which is basically

00:35:27.989 --> 00:35:29.500
the total operation.

00:35:29.500 --> 00:35:34.139
So I thought that was the best way to try to look at this

00:35:34.139 --> 00:35:35.500
situation.

00:35:35.500 --> 00:35:37.500
A lot of different analyses can be done in this.

00:35:37.500 --> 00:35:42.500
I basically went with the wells to wheels analysis.

00:35:42.500 --> 00:35:46.889
We used a 2015 platform vehicle refuse truck of the

00:35:46.889 --> 00:35:50.500
appropriate weight of the trucks that we use.

00:35:50.500 --> 00:35:53.500
This gives you a screenshot of what the analyses look like.

00:35:53.500 --> 00:35:57.500
And you can see that we can look at all different types of

00:35:57.500 --> 00:36:00.500
emissions, water use, you name it.

00:36:00.500 --> 00:36:04.500
It's a very extensive analysis.

00:36:04.500 --> 00:36:08.340
Give you a real quick look at some of the high points of

00:36:08.340 --> 00:36:11.500
what the output that I chose to look at.

00:36:11.500 --> 00:36:15.190
I really wanted to focus on volatile organic compounds,

00:36:15.190 --> 00:36:17.500
carbon monoxide, nitrogen oxides.

00:36:17.500 --> 00:36:21.500
These two are some of your main precursors to ozone.

00:36:21.500 --> 00:36:24.320
And then I also wanted to look at a couple of the elements

00:36:24.320 --> 00:36:26.989
that deal with greenhouse gas emissions like methane

00:36:26.989 --> 00:36:32.500
emissions, carbon dioxide, and nitrogen oxides.

00:36:32.500 --> 00:36:35.500
So this table is kind of hard to make a direct comparison.

00:36:35.500 --> 00:36:39.500
So what I tried to do is look at it on a percentage basis.

00:36:39.500 --> 00:36:43.489
Hopefully that will be a little bit easier to kind of asc

00:36:43.489 --> 00:36:45.500
ertain what's going on.

00:36:45.500 --> 00:36:48.829
Basically, if you look at the total energy, the B20

00:36:48.829 --> 00:36:54.500
platform, which is what we use in our vehicle, biodiesel,

00:36:54.500 --> 00:36:56.500
is about 82%.

00:36:56.500 --> 00:37:05.500
This is a B20 comparison to compress natural gas.

00:37:05.500 --> 00:37:10.659
So any number lower than 100% will tell you that the B20 is

00:37:10.659 --> 00:37:14.500
a lower emitting or lower energy consumption.

00:37:14.500 --> 00:37:19.829
Anything greater than 100% would tell you that the CNG is

00:37:19.829 --> 00:37:21.500
the lower option.

00:37:21.500 --> 00:37:28.000
So in looking at the volatile organic compounds, we're

00:37:28.000 --> 00:37:32.699
actually seeing quite a bit less produced by the CNG

00:37:32.699 --> 00:37:33.500
platform.

00:37:33.500 --> 00:37:37.500
Much less carbon monoxide produced.

00:37:37.500 --> 00:37:43.500
Interestingly, in operation, it's going to produce about

00:37:43.500 --> 00:37:47.500
twice the amount of nitrogen oxides.

00:37:47.500 --> 00:37:52.360
But if you look at the total wells to wheel analysis, it's

00:37:52.360 --> 00:37:56.500
actually only about 10% or 11% more.

00:37:56.500 --> 00:37:58.500
Sorry, I'm having some mouse problems here.

00:37:58.500 --> 00:38:03.500
PM10, particulate matter of 10 microns or greater.

00:38:03.500 --> 00:38:07.760
B20 produces about the same amount when in operation, but

00:38:07.760 --> 00:38:12.030
about half again as much when you're looking at the overall

00:38:12.030 --> 00:38:13.500
full life cycle.

00:38:13.500 --> 00:38:19.500
Similar situation with particulate matter of 2.5 microns.

00:38:19.500 --> 00:38:23.500
Sulfur dioxide, B20 is slightly higher.

00:38:23.500 --> 00:38:25.500
This one is the very interesting part.

00:38:25.500 --> 00:38:30.369
When you look at the methane emissions, B20 produces much

00:38:30.369 --> 00:38:34.500
less methane when operating and for the full life cycle

00:38:34.500 --> 00:38:38.500
when compared to a compressed natural gas platform.

00:38:38.500 --> 00:38:41.500
CO2 is slightly higher.

00:38:41.500 --> 00:38:46.829
And then nitrogen oxides produces more when operating and

00:38:46.829 --> 00:38:49.500
then more for full life cycle.

00:38:49.500 --> 00:38:54.829
So what I tried to do is give you a sense from a ground

00:38:54.829 --> 00:38:59.550
level ozone standpoint, you're going to have slightly

00:38:59.550 --> 00:39:01.500
higher nitrogen oxides.

00:39:01.500 --> 00:39:04.829
We have a tendency, depending on the model that you look at

00:39:04.829 --> 00:39:07.500
, for this area to be nitrogen oxide limits.

00:39:07.500 --> 00:39:09.500
So limited.

00:39:09.500 --> 00:39:12.840
Some models would suggest that we're transitional, keeping

00:39:12.840 --> 00:39:15.010
in mind that you've got to have both volatile organic

00:39:15.010 --> 00:39:18.500
compounds and nitrogen oxides to form ozone.

00:39:18.500 --> 00:39:21.500
It's more about the relative proportion of them.

00:39:21.500 --> 00:39:27.500
So it's again a little bit less on the volatile organics.

00:39:27.500 --> 00:39:33.159
So those times where volatile organic limited, it would

00:39:33.159 --> 00:39:37.940
actually be better for nitrogen oxide, which is, I would

00:39:37.940 --> 00:39:45.139
argue, for our area tends to be the larger predominant type

00:39:45.139 --> 00:39:47.500
of ozone formation.

00:39:47.500 --> 00:39:51.260
You're going to have a tendency to see a slightly greater

00:39:51.260 --> 00:39:55.349
effect from full life cycle comparing B20 to compressed

00:39:55.349 --> 00:39:56.500
natural gas.

00:39:56.500 --> 00:40:01.260
However, if you look at the global warming potential,

00:40:01.260 --> 00:40:06.769
especially on a 20-year basis, that methane production

00:40:06.769 --> 00:40:11.570
makes a very large difference when you're comparing these

00:40:11.570 --> 00:40:13.500
two fuel platforms.

00:40:13.500 --> 00:40:18.840
And so your net global warming potential on a 20-year basis

00:40:18.840 --> 00:40:23.800
is going to be substantially higher for compressed natural

00:40:23.800 --> 00:40:24.500
gas.

00:40:24.500 --> 00:40:28.550
On a 20-year basis, it's going to, I'm sorry, on a 100-year

00:40:28.550 --> 00:40:31.500
basis rather, it's going to be almost a wash.

00:40:31.500 --> 00:40:35.849
So that's a very rough thumbnail sketch of kind of the

00:40:35.849 --> 00:40:38.500
difference between the two.

00:40:38.500 --> 00:40:43.489
So in summary, I would say that from a ground level ozone,

00:40:43.489 --> 00:40:48.500
it's slightly more impactive to go with a B20.

00:40:48.500 --> 00:40:51.500
But keep in mind that that gap has closed substantially.

00:40:51.500 --> 00:40:53.440
And I think it's fair to point out it's closed

00:40:53.440 --> 00:40:56.500
substantially since when this was evaluated in 2012.

00:40:56.500 --> 00:40:59.829
The newer diesel engines have a lot more emission controls

00:40:59.829 --> 00:41:00.500
on them.

00:41:00.500 --> 00:41:04.360
There are additives that are provided in those engines that

00:41:04.360 --> 00:41:08.179
are designed to try to deal with some of these contaminants

00:41:08.179 --> 00:41:08.500
.

00:41:08.500 --> 00:41:12.880
But the global warming potential in terms of greenhouse gas

00:41:12.880 --> 00:41:17.199
emissions from comparing the B20 platform to compressed

00:41:17.199 --> 00:41:19.699
natural gas, compressed natural gas is going to have a

00:41:19.699 --> 00:41:21.500
greater impact, especially on a 20-year basis.

00:41:21.500 --> 00:41:24.500
It's about a wash on a 100-year basis.

00:41:24.500 --> 00:41:29.670
So very brief, very high-level overview, but I'd be happy

00:41:29.670 --> 00:41:32.500
to try to answer any questions.

00:41:32.500 --> 00:41:36.500
What do you mean when you say biodiesel uses less energy?

00:41:36.500 --> 00:41:40.500
Does that mean that it stores more and is more efficient?

00:41:40.500 --> 00:41:44.690
It has to do with the energy of production and the energy

00:41:44.690 --> 00:41:45.500
of use.

00:41:45.500 --> 00:41:48.650
So on a per gallon equivalent, you're actually going to use

00:41:48.650 --> 00:41:51.500
a little bit more CNG than you are with biodiesel.

00:41:51.500 --> 00:41:56.360
And then it also has to do with the processing and the

00:41:56.360 --> 00:41:59.500
transport of that fuel as well.

00:41:59.500 --> 00:42:01.880
And so you're going to use a little bit less there, too,

00:42:01.880 --> 00:42:02.500
overall.

00:42:02.500 --> 00:42:05.500
Okay. And can you back up one slide?

00:42:05.500 --> 00:42:06.500
This one?

00:42:06.500 --> 00:42:07.500
No, one slide.

00:42:07.500 --> 00:42:08.500
This one.

00:42:08.500 --> 00:42:16.500
So is there such thing as a grid-dependent refuse truck?

00:42:16.500 --> 00:42:20.500
Because that says grid-independent.

00:42:20.500 --> 00:42:24.849
They don't have that as an option in there, so I'm not

00:42:24.849 --> 00:42:27.500
really sure what that means.

00:42:27.500 --> 00:42:31.500
That is a -- yeah, yeah.

00:42:31.500 --> 00:42:35.500
I don't know if there is an intention at some point.

00:42:35.500 --> 00:42:37.650
This program has been around for a while and has had some

00:42:37.650 --> 00:42:38.500
various updates.

00:42:38.500 --> 00:42:42.199
I have a feeling that they're adding these in there with

00:42:42.199 --> 00:42:45.090
the anticipation that at some point there will be a

00:42:45.090 --> 00:42:46.500
platform like that,

00:42:46.500 --> 00:42:48.860
and that way they can convert back and forth with older

00:42:48.860 --> 00:42:49.500
versions.

00:42:49.500 --> 00:42:50.500
That would be my guess.

00:42:50.500 --> 00:42:52.500
Okay. I just saw that.

00:42:52.500 --> 00:42:53.500
Right.

00:42:53.500 --> 00:42:57.500
Just so I can get my head around it.

00:42:57.500 --> 00:43:01.130
So basically what you're saying, and I'm trying to get it

00:43:01.130 --> 00:43:03.500
all down to the layman's terms,

00:43:03.500 --> 00:43:11.500
what we're saying is that CNG is not as clean as diesel?

00:43:11.500 --> 00:43:15.500
I don't know if I would say that.

00:43:15.500 --> 00:43:19.190
What I would say is that when we've evaluated these two

00:43:19.190 --> 00:43:22.750
fuel platforms, at least my perspective when we've looked

00:43:22.750 --> 00:43:23.500
at them,

00:43:23.500 --> 00:43:26.300
we've been mainly focused on the operation of the vehicle

00:43:26.300 --> 00:43:28.500
and the production of ground-level ozone.

00:43:28.500 --> 00:43:30.500
That's kind of been the focus.

00:43:30.500 --> 00:43:33.500
And the operation of the vehicle is what, five years?

00:43:33.500 --> 00:43:36.500
Yes, but keep in mind this is on a per-mile basis.

00:43:36.500 --> 00:43:44.929
So it doesn't, in terms of the number of miles that it's on

00:43:44.929 --> 00:43:47.500
a per-mile basis.

00:43:47.500 --> 00:43:52.369
And basically it would be this multiplied by whatever miles

00:43:52.369 --> 00:43:54.500
the vehicle has put on.

00:43:54.500 --> 00:43:59.489
So effectively this is a way to normalize those platforms

00:43:59.489 --> 00:44:02.650
and kind of take the relative miles driven by each one out

00:44:02.650 --> 00:44:03.500
of the equation.

00:44:03.500 --> 00:44:07.909
So we're assuming they're driven the same miles and to make

00:44:07.909 --> 00:44:11.179
it easy we're just going to put it in a single per-mile

00:44:11.179 --> 00:44:13.500
emission for each fuel platform.

00:44:13.500 --> 00:44:17.670
So circling back, I think that the original intention was

00:44:17.670 --> 00:44:20.500
to look at it from an impact to ozone.

00:44:20.500 --> 00:44:26.480
And although biodiesel platforms and diesel platforms in

00:44:26.480 --> 00:44:29.500
general have closed that gap,

00:44:29.500 --> 00:44:34.099
they still are going to be on average and keeping in mind

00:44:34.099 --> 00:44:37.500
that we're focusing on nitrogen oxides

00:44:37.500 --> 00:44:42.829
because nitrogen oxides tend to be the limiting factor in

00:44:42.829 --> 00:44:44.500
this area, but not always.

00:44:44.500 --> 00:44:47.500
Sometimes it's volatile organic compounds.

00:44:47.500 --> 00:44:51.989
And basically what we're seeing here is if you look at the

00:44:51.989 --> 00:44:53.500
actual operation,

00:44:53.500 --> 00:44:57.420
a biodiesel is going to produce quite a bit more, about

00:44:57.420 --> 00:44:59.500
double nitrogen oxides.

00:44:59.500 --> 00:45:02.420
But if you look at the entire fuel cycle, taking into

00:45:02.420 --> 00:45:06.510
account the obtaining of this material all the way through

00:45:06.510 --> 00:45:07.500
the full process,

00:45:07.500 --> 00:45:10.539
that gap is actually pretty small. It's only about 11

00:45:10.539 --> 00:45:11.500
percent greater.

00:45:11.500 --> 00:45:19.480
So I would say from an ozone standpoint, a B-20 vehicle is

00:45:19.480 --> 00:45:26.500
going to be slightly worse than a CNG vehicle today.

00:45:26.500 --> 00:45:33.460
In terms of greenhouse gas emissions, fuel, full cycle,

00:45:33.460 --> 00:45:36.829
everything from fuel use all the way back to the well

00:45:36.829 --> 00:45:37.500
itself,

00:45:37.500 --> 00:45:40.880
with the estimations in this model, would suggest that the

00:45:40.880 --> 00:45:46.599
greenhouse gas potential of a CNG vehicle is greater than a

00:45:46.599 --> 00:45:50.500
biodiesel vehicle on a 20-year basis.

00:45:50.500 --> 00:45:56.280
Those emissions, some molecules like methane, don't last as

00:45:56.280 --> 00:45:59.989
long in the atmosphere as other molecules like nitrogen ox

00:45:59.989 --> 00:46:00.500
ides.

00:46:00.500 --> 00:46:06.210
That's why you have to look at it at a 20-year basis and a

00:46:06.210 --> 00:46:12.500
100-year basis or whatever year factor makes sense.

00:46:12.500 --> 00:46:16.500
Any other questions?

00:46:16.500 --> 00:46:21.530
It also reminds you, when you speak, make sure your light

00:46:21.530 --> 00:46:25.500
is green so we pick you up on the recording.

00:46:25.500 --> 00:46:33.179
Well, I guess the idea of CNG, it's not really an economic

00:46:33.179 --> 00:46:37.989
decision, obviously, unless you look at it as what's the

00:46:37.989 --> 00:46:44.500
best way, what's the least cost of it.

00:46:44.500 --> 00:46:50.159
I guess throwing in the option of biodiesel versus, because

00:46:50.159 --> 00:46:55.699
really you're picking up your emissions savings from the

00:46:55.699 --> 00:46:57.500
production side.

00:46:57.500 --> 00:46:58.500
Right.

00:46:58.500 --> 00:46:59.500
It's where that is.

00:46:59.500 --> 00:47:03.500
Right.

00:47:03.500 --> 00:47:08.500
Okay. Anybody else? Thank you.

00:47:08.500 --> 00:47:15.460
All right. So back to the financial picture a little bit.

00:47:15.460 --> 00:47:15.500
So this is, again, a baseline compared to diesel.

00:47:15.500 --> 00:47:18.300
From a staff perspective, what we wanted to present to you

00:47:18.300 --> 00:47:20.840
is what we believe to be the most viable options moving

00:47:20.840 --> 00:47:21.500
forward.

00:47:21.500 --> 00:47:24.460
And so for our next pro forma, we're actually going to

00:47:24.460 --> 00:47:26.500
subtract out the mobile fueling.

00:47:26.500 --> 00:47:29.090
Obviously, we need to get off that platform as fast as we

00:47:29.090 --> 00:47:29.500
can.

00:47:29.500 --> 00:47:31.500
And then we also took out...

00:47:31.500 --> 00:47:33.190
Go ahead, Charlie. We're probably going to ask the same

00:47:33.190 --> 00:47:33.500
question. Go.

00:47:33.500 --> 00:47:38.139
I have one question before you move forward. Option number

00:47:38.139 --> 00:47:42.500
two, where you retrofit your entire fleet, I guess.

00:47:42.500 --> 00:47:45.550
Did you look at it on the basis of attrition of your

00:47:45.550 --> 00:47:49.429
vehicles since they normally only last, what, say, five to

00:47:49.429 --> 00:47:50.500
seven years?

00:47:50.500 --> 00:47:54.530
Right. This was a very quick and, I mean, this is an

00:47:54.530 --> 00:47:55.500
estimate.

00:47:55.500 --> 00:47:58.849
So I think that's one option that we could certainly go

00:47:58.849 --> 00:48:02.130
back and take a look at if you're interested in that is

00:48:02.130 --> 00:48:05.489
which vehicles do we want to allow to just go ahead and

00:48:05.489 --> 00:48:06.500
replace today?

00:48:06.500 --> 00:48:09.829
I will say this, that we have had some recent purchases on

00:48:09.829 --> 00:48:12.500
this that's going to make that very costly.

00:48:12.500 --> 00:48:14.800
Most of our older vehicles, I think we've probably got

00:48:14.800 --> 00:48:17.360
about eight to 12 that would probably be good candidates

00:48:17.360 --> 00:48:20.500
for just let's just go ahead and replace it now, you know,

00:48:20.500 --> 00:48:22.500
a couple years early.

00:48:22.500 --> 00:48:25.090
But at least half of those 24 vehicles have been purchased

00:48:25.090 --> 00:48:26.500
in the last two to three years.

00:48:26.500 --> 00:48:29.909
And so you're going to be upside down on your financing of

00:48:29.909 --> 00:48:30.500
that.

00:48:30.500 --> 00:48:33.659
And you're going to be incurring some additional cost. It's

00:48:33.659 --> 00:48:34.500
certainly an option.

00:48:34.500 --> 00:48:36.500
It's just not one that we put a lot of pen to pad on.

00:48:36.500 --> 00:48:40.219
This was kind of our estimate on just straight retrofit for

00:48:40.219 --> 00:48:41.500
those vehicles.

00:48:41.500 --> 00:48:44.050
And the total fleet is 24 or is there more than 24 in the

00:48:44.050 --> 00:48:44.500
fleet?

00:48:44.500 --> 00:48:48.929
There's 24 CNG's as we talked today. We've put the stops on

00:48:48.929 --> 00:48:51.500
any additional investments in CNG.

00:48:51.500 --> 00:48:54.500
But what is our total fleet? So we have some diesel.

00:48:54.500 --> 00:48:56.500
This is about 40% of our fleet.

00:48:56.500 --> 00:48:57.500
Okay. Right now.

00:48:57.500 --> 00:48:59.889
Now that does not include light duty vehicles like pickup

00:48:59.889 --> 00:49:01.500
trucks, cars, things like that.

00:49:01.500 --> 00:49:04.500
This is really just our operation trucks.

00:49:04.500 --> 00:49:08.760
So this station would only be servicing about 40% of our

00:49:08.760 --> 00:49:09.500
fleet?

00:49:09.500 --> 00:49:12.980
Well, that station currently services our fleet today

00:49:12.980 --> 00:49:15.500
because it has other pumps and stuff.

00:49:15.500 --> 00:49:18.500
The new pumps would service 40% of our fleet.

00:49:18.500 --> 00:49:21.829
The $2.7 million investment that we're talking about, it

00:49:21.829 --> 00:49:23.500
would be for 40%.

00:49:23.500 --> 00:49:26.440
And what our recommendation would be, not to get too far

00:49:26.440 --> 00:49:27.500
ahead of ourselves,

00:49:27.500 --> 00:49:30.630
but we would recommend aging out this fleet until gas

00:49:30.630 --> 00:49:33.659
prices would dictate that we can recover at least our

00:49:33.659 --> 00:49:35.500
incremental cost for conversion.

00:49:35.500 --> 00:49:37.500
We're not even covering that cost right now.

00:49:37.500 --> 00:49:41.480
And so it's a financial loser unless there's a big enough

00:49:41.480 --> 00:49:44.500
margin to cover that conversion cost.

00:49:44.500 --> 00:49:49.210
And back to option two, I think I heard you say you would

00:49:49.210 --> 00:49:52.500
not recommend trying to switch them back to diesel

00:49:52.500 --> 00:49:55.050
because you don't know what you're going to get operation

00:49:55.050 --> 00:49:56.500
ally once you've done that.

00:49:56.500 --> 00:49:59.300
Yeah, it's something we haven't fully vetted, and I'm not

00:49:59.300 --> 00:50:02.449
sure of too many folks out there that have gone through

00:50:02.449 --> 00:50:03.500
that hassle.

00:50:03.500 --> 00:50:06.360
I know when we talked to fleet, we talked to them just

00:50:06.360 --> 00:50:09.519
briefly about this, and the warning lights were flashing

00:50:09.519 --> 00:50:11.500
all over the place whenever that conversation came up.

00:50:11.500 --> 00:50:14.360
I think, to Mr. Jackson's point, if that's something we

00:50:14.360 --> 00:50:16.829
want to entertain, if we want to try to step away from as

00:50:16.829 --> 00:50:19.500
many of these vehicles as fast as possible,

00:50:19.500 --> 00:50:22.010
probably the best option would be to go ahead and replace a

00:50:22.010 --> 00:50:25.070
few early and then allow those others to age out to such a

00:50:25.070 --> 00:50:28.260
point to where it makes a little bit more sense financially

00:50:28.260 --> 00:50:28.500
.

00:50:28.500 --> 00:50:29.500
Barbara.

00:50:29.500 --> 00:50:33.500
Is there a market for us to sell the ones we have?

00:50:33.500 --> 00:50:36.500
So this is another bit of bad news.

00:50:36.500 --> 00:50:38.500
There's not a huge market out there for CNG.

00:50:38.500 --> 00:50:41.500
There's not a lot of cities that are on this.

00:50:41.500 --> 00:50:44.650
I think Terrell and San Antonio are the two that we have as

00:50:44.650 --> 00:50:45.500
examples.

00:50:45.500 --> 00:50:51.130
Last week, we got $60,000 each for a pair of diesel front

00:50:51.130 --> 00:50:53.500
load or rear load trucks.

00:50:53.500 --> 00:50:56.409
I haven't verified this, but we heard that a similar CNG

00:50:56.409 --> 00:50:58.500
vehicle brought $1,000.

00:50:58.500 --> 00:51:03.000
So that's hearsay. I'll put that caveat out there, but we

00:51:03.000 --> 00:51:06.869
think that the salvage value of these are going to be

00:51:06.869 --> 00:51:11.389
significantly less than diesel just because the demand isn

00:51:11.389 --> 00:51:12.500
't there.

00:51:12.500 --> 00:51:22.710
So in the older CNG models die, we will replace them with

00:51:22.710 --> 00:51:23.500
what? With diesel?

00:51:23.500 --> 00:51:28.940
We would go back to diesel would be our recommendation,

00:51:28.940 --> 00:51:30.500
absolutely.

00:51:30.500 --> 00:51:33.579
So for this pro forma, again, we took out options one and

00:51:33.579 --> 00:51:36.500
two just because we don't see those as very viable.

00:51:36.500 --> 00:51:39.409
So really what we're left with is completing the

00:51:39.409 --> 00:51:41.500
construction of the station.

00:51:41.500 --> 00:51:44.650
The real policy question for the PUB and what we propose to

00:51:44.650 --> 00:51:47.170
the council is, do you want to move forward public sales or

00:51:47.170 --> 00:51:47.500
not?

00:51:47.500 --> 00:51:50.469
And again, for the purposes of this pro forma, all that

00:51:50.469 --> 00:51:54.500
that's contemplating is that $600,000 in grant funds.

00:51:54.500 --> 00:51:57.050
The difference in this pro forma versus the other one is,

00:51:57.050 --> 00:52:00.269
to Mr. Caroll's point a little bit earlier, what does it

00:52:00.269 --> 00:52:03.500
look like comparing to what we're doing today?

00:52:03.500 --> 00:52:06.300
And so all these numbers are the same down to the net

00:52:06.300 --> 00:52:07.500
income, net loss.

00:52:07.500 --> 00:52:10.500
The difference is your fuel costs/savings.

00:52:10.500 --> 00:52:13.829
And so by pressing forward, completing the station, you do

00:52:13.829 --> 00:52:17.389
save about $1.8 million over the next five years by getting

00:52:17.389 --> 00:52:19.500
off the mobile fueling platform.

00:52:19.500 --> 00:52:22.860
And so if you take that angle in the analysis, if you don't

00:52:22.860 --> 00:52:26.260
compare it to what we would pay diesel wise, if you compare

00:52:26.260 --> 00:52:29.030
it to mobile fueling, there is a bit of a rosier picture

00:52:29.030 --> 00:52:29.500
here.

00:52:29.500 --> 00:52:33.519
And so if we use it for city of Denton use only, we would

00:52:33.519 --> 00:52:38.500
estimate about a $390,000 net positive to this.

00:52:38.500 --> 00:52:43.829
If we do public sales, again, you're adding the $600,000 or

00:52:43.829 --> 00:52:45.500
so in grant funding.

00:52:45.500 --> 00:52:47.510
I mentioned earlier that there are some additional

00:52:47.510 --> 00:52:49.500
considerations if you want to do public sales.

00:52:49.500 --> 00:52:52.199
And again, this is stuff that all of us are a little bit

00:52:52.199 --> 00:52:54.500
out of our depth on, to be honest with you.

00:52:54.500 --> 00:52:57.159
Competition, right now there is absolutely, in my

00:52:57.159 --> 00:53:00.400
understanding, zero infrastructure, zero pumps in the city

00:53:00.400 --> 00:53:01.500
of Denton for CNG.

00:53:01.500 --> 00:53:03.500
That's kind of why we are where we are.

00:53:03.500 --> 00:53:08.059
If QT had some pumps right now or loves, then that's what

00:53:08.059 --> 00:53:10.500
we would be recommending.

00:53:10.500 --> 00:53:14.420
However, if we install this station, we want to offer

00:53:14.420 --> 00:53:17.900
public sales and QT puts one in behind us, then public

00:53:17.900 --> 00:53:20.489
sales evaporates because we're never going to compete with

00:53:20.489 --> 00:53:21.500
them on a cost basis.

00:53:21.500 --> 00:53:24.500
Plus, you can also go get some Twizzlers and some beef jer

00:53:24.500 --> 00:53:27.550
ky at the service station that we're not going to be selling

00:53:27.550 --> 00:53:28.500
at our place.

00:53:28.500 --> 00:53:33.489
Administrative costs, we don't know exactly what those are,

00:53:33.489 --> 00:53:35.280
but it's not a stretch to think that we're going to need at

00:53:35.280 --> 00:53:38.869
least a full-time employee to manage the operational

00:53:38.869 --> 00:53:40.500
expenses with this, the maintenance.

00:53:40.500 --> 00:53:44.159
You know, if you have a full-time employee, $50,000 to $60,

00:53:44.159 --> 00:53:47.840
000 a year, we're going to buy it into that $600,000 very

00:53:47.840 --> 00:53:48.500
quickly.

00:53:48.500 --> 00:53:51.929
There's also going to be advertising costs, promotional

00:53:51.929 --> 00:53:55.500
costs, security costs, card processing costs.

00:53:55.500 --> 00:53:58.300
Even though we don't have a gas station attendant, about 2

00:53:58.300 --> 00:54:00.829
to 3% of every transaction is going to go to the card

00:54:00.829 --> 00:54:01.500
processors.

00:54:01.500 --> 00:54:03.500
It may be more than that.

00:54:03.500 --> 00:54:05.500
You're absolutely right.

00:54:05.500 --> 00:54:08.829
One of the things that do give me a little bit of concern,

00:54:08.829 --> 00:54:12.179
and maybe I'm just being paranoid, but security is an issue

00:54:12.179 --> 00:54:12.500
.

00:54:12.500 --> 00:54:15.300
You look at some of the gas stations with the skimmers they

00:54:15.300 --> 00:54:18.000
put on there, and to take advantage of the card swipes, we

00:54:18.000 --> 00:54:20.500
're going to have to install security cameras.

00:54:20.500 --> 00:54:23.860
If we're not open 24/7, we're going to need to limit public

00:54:23.860 --> 00:54:24.500
access.

00:54:24.500 --> 00:54:28.650
We also have a number of other facilities out there that,

00:54:28.650 --> 00:54:30.690
you know, our customers are going to understand the

00:54:30.690 --> 00:54:34.500
difference between our CNG pumps and our other fuel pumps.

00:54:34.500 --> 00:54:37.400
That's going to be a challenge that someone rolls up to the

00:54:37.400 --> 00:54:40.239
wrong pump and starts fueling or is frustrated that they

00:54:40.239 --> 00:54:42.500
can't get gas out of a particular pump.

00:54:42.500 --> 00:54:44.460
Again, we're not going to have an attendant down there to

00:54:44.460 --> 00:54:45.500
guide them and tell them.

00:54:45.500 --> 00:54:49.500
Why would we have other kinds of pumps there?

00:54:49.500 --> 00:54:50.500
They're there today.

00:54:50.500 --> 00:54:55.019
Now, we have an alternative fuel island. When you come into

00:54:55.019 --> 00:54:56.659
the entrance of our facility, this would be adding on to

00:54:56.659 --> 00:54:57.500
those existing pumps.

00:54:57.500 --> 00:54:59.500
And then lastly, there's liability concerns.

00:54:59.500 --> 00:55:01.289
I'm not sure what our insurance looks like on the

00:55:01.289 --> 00:55:02.500
alternative fuel station.

00:55:02.500 --> 00:55:04.500
That's something we can go back and take a look at.

00:55:04.500 --> 00:55:07.829
But with having public access to that facility, that's

00:55:07.829 --> 00:55:10.500
something that will need to be reevaluated.

00:55:10.500 --> 00:55:13.309
So with all those, I don't want to presume, but I would

00:55:13.309 --> 00:55:17.019
speculate that $600,000 in grant funds, we will easily

00:55:17.019 --> 00:55:20.119
exceed that with all these additional considerations over

00:55:20.119 --> 00:55:21.500
the next five years.

00:55:21.500 --> 00:55:24.579
And based on that, that's why we as staff are recommending

00:55:24.579 --> 00:55:27.500
we go ahead and push through with the fuel station.

00:55:27.500 --> 00:55:30.840
We use it for city of Denton purposes, return the grant

00:55:30.840 --> 00:55:31.500
funds.

00:55:31.500 --> 00:55:35.610
The nice thing about the fuel station is if market prices

00:55:35.610 --> 00:55:39.500
do return in our favor, this is an option there for us.

00:55:39.500 --> 00:55:43.630
What I recommend upgrading a solid waste truck, the

00:55:43.630 --> 00:55:46.150
operation of those vehicles doesn't make sense unless there

00:55:46.150 --> 00:55:48.500
's a huge difference between CNG and diesel.

00:55:48.500 --> 00:55:51.059
However, light duty vehicles and other vehicles in our

00:55:51.059 --> 00:55:54.280
fleet, we can certainly take a look at and make sure they

00:55:54.280 --> 00:55:56.500
make financial sense if we want to go that route.

00:55:56.500 --> 00:56:01.360
So next steps, we do have this up for council discussion

00:56:01.360 --> 00:56:02.500
tomorrow.

00:56:02.500 --> 00:56:04.630
So whatever your recommendation is, we'll be sure to share

00:56:04.630 --> 00:56:05.500
that with council.

00:56:05.500 --> 00:56:08.300
If we do press forward with the station, we do have a

00:56:08.300 --> 00:56:11.199
couple of things that we need to get back in front of the

00:56:11.199 --> 00:56:12.500
PV and the council.

00:56:12.500 --> 00:56:15.539
One being a gas delivery agreement, which would be the

00:56:15.539 --> 00:56:18.869
transport of the gas through the gas lines, likely through

00:56:18.869 --> 00:56:19.500
Atmos.

00:56:19.500 --> 00:56:22.199
And then also a gas purchase agreement, we'll have to go

00:56:22.199 --> 00:56:24.949
out and secure rights to purchase the gas that we're going

00:56:24.949 --> 00:56:26.500
to use for this facility.

00:56:26.500 --> 00:56:29.420
And if everyone's in agreement with that, we'll also

00:56:29.420 --> 00:56:32.599
initiate the gas line construction and get rolling on that

00:56:32.599 --> 00:56:35.570
so that we can get off of the mobile fueling as quickly as

00:56:35.570 --> 00:56:36.500
possible.

00:56:36.500 --> 00:56:39.980
So with that, I'll be happy to stand for any additional

00:56:39.980 --> 00:56:41.500
questions you have.

00:56:41.500 --> 00:56:42.500
>> Comments?

00:56:42.500 --> 00:56:44.500
Go ahead.

00:56:44.500 --> 00:56:48.329
>> Brendan, has anybody researched if there are any

00:56:48.329 --> 00:56:52.519
compressed natural gas stations available for our use in

00:56:52.519 --> 00:56:53.500
the area?

00:56:53.500 --> 00:56:56.199
>> We've looked into it, I think the closest that we have,

00:56:56.199 --> 00:56:58.530
and I'm going to look at Nick to see if he had a head nod

00:56:58.530 --> 00:56:59.500
or head shake.

00:56:59.500 --> 00:57:00.500
We did approach LAWs.

00:57:00.500 --> 00:57:02.500
We had heard that that was a possibility.

00:57:02.500 --> 00:57:06.429
LOVs, Truck Stop, I believe there's a new facility being

00:57:06.429 --> 00:57:09.500
built off of Loop 288 and I-35.

00:57:09.500 --> 00:57:12.500
My understanding is there's nothing imminent.

00:57:12.500 --> 00:57:14.849
It's not necessarily tied into their roadmap for that

00:57:14.849 --> 00:57:15.500
facility.

00:57:15.500 --> 00:57:17.500
It's just a possibility.

00:57:17.500 --> 00:57:20.579
And so that is one of the things that I would encourage you

00:57:20.579 --> 00:57:23.539
to consider is if we want to hold out and go investigate

00:57:23.539 --> 00:57:26.500
that further, we're certainly happy to do so.

00:57:26.500 --> 00:57:29.389
But what I would say is most every situation we're going to

00:57:29.389 --> 00:57:32.340
encounter, they're going to have the ramp up and build out

00:57:32.340 --> 00:57:33.500
time that we have.

00:57:33.500 --> 00:57:36.139
And for them, they're going to look at it and see if it

00:57:36.139 --> 00:57:37.500
makes financial sense.

00:57:37.500 --> 00:57:40.829
Our understanding is there's no guarantees of any pump

00:57:40.829 --> 00:57:43.500
development in the Denton area right now.

00:57:43.500 --> 00:57:47.860
UPS uses CNG. Do they have a fueling station on Shady Sh

00:57:47.860 --> 00:57:49.500
ores or wherever?

00:57:49.500 --> 00:57:50.500
I'm not sure.

00:57:50.500 --> 00:57:54.639
I know they advertise on the side some of their vehicles

00:57:54.639 --> 00:57:55.500
use CNG.

00:57:55.500 --> 00:57:58.300
I haven't heard that, but we can certainly investigate that

00:57:58.300 --> 00:57:58.500
.

00:57:58.500 --> 00:58:01.860
I would think that those would be some important things to

00:58:01.860 --> 00:58:02.500
look at.

00:58:02.500 --> 00:58:06.539
I would also think we would consider how much would it cost

00:58:06.539 --> 00:58:10.349
to purchase our own mobile fueling truck and fuel them

00:58:10.349 --> 00:58:11.500
ourselves.

00:58:11.500 --> 00:58:13.500
I mean, I know there's mileage and all that.

00:58:13.500 --> 00:58:15.500
There's got to be some kind of break even there.

00:58:15.500 --> 00:58:19.730
But if it's worth it to this other company to do it, then

00:58:19.730 --> 00:58:23.500
it may actually give us a better bottom line.

00:58:23.500 --> 00:58:27.500
That's one of the scenarios we've actually talked about.

00:58:27.500 --> 00:58:31.219
I haven't seen how they construct their per gallon cost or

00:58:31.219 --> 00:58:32.500
cost recovery.

00:58:32.500 --> 00:58:36.119
A big portion of what we pay them, I would imagine, is the

00:58:36.119 --> 00:58:38.500
transportation of the fuel to us.

00:58:38.500 --> 00:58:40.949
But that's definitely something, if that's the direction of

00:58:40.949 --> 00:58:43.239
the board, we're happy to go back and evaluate as an option

00:58:43.239 --> 00:58:43.500
.

00:58:43.500 --> 00:58:45.980
I think it would just be nice to make sure we covered all

00:58:45.980 --> 00:58:49.679
our bases so we made the best choice from all the available

00:58:49.679 --> 00:58:50.500
choices.

00:58:50.500 --> 00:58:53.980
Yeah, I think that that part of the piece of the puzzle

00:58:53.980 --> 00:58:57.500
seems to be the only one profitable at this point.

00:58:57.500 --> 00:59:00.500
Yeah. We'll bring it to you.

00:59:00.500 --> 00:59:05.829
If somebody like Luz or QT, if a retailer doesn't find the

00:59:05.829 --> 00:59:09.739
potential in making money off of it, then it can't be made

00:59:09.739 --> 00:59:11.500
at this point.

00:59:11.500 --> 00:59:15.400
And that's a function of the cost of diesel and what you

00:59:15.400 --> 00:59:16.500
can charge.

00:59:16.500 --> 00:59:26.139
Yeah, I think there's probably, I know you all have looked

00:59:26.139 --> 00:59:32.019
at this every way you can, just want to make sure before we

00:59:32.019 --> 00:59:34.500
bite off a capital expenditure

00:59:34.500 --> 00:59:40.800
that we're not going to, if we're going to be going back

00:59:40.800 --> 00:59:48.590
and leaning more back to diesel, biodiesel fleet, then we

00:59:48.590 --> 00:59:50.500
don't want stranded capital cost out there.

00:59:50.500 --> 00:59:52.500
We may already have it, I don't know.

00:59:52.500 --> 00:59:53.500
Right.

00:59:53.500 --> 00:59:59.130
And, you know, as far as taking, you know, the TCEQ grant,

00:59:59.130 --> 01:00:04.500
I think that we don't really see public sales as viable.

01:00:04.500 --> 01:00:08.500
I don't know that I'm not sure we should have a conscience,

01:00:08.500 --> 01:00:12.929
but in the spirit of the grant, you know, it's for public

01:00:12.929 --> 01:00:13.500
sales.

01:00:13.500 --> 01:00:18.829
If it's really not viable, then that may be something we

01:00:18.829 --> 01:00:20.500
just let it go.

01:00:20.500 --> 01:00:23.389
One of the things I would throw in on public sales is the

01:00:23.389 --> 01:00:25.500
grant requires full public sales.

01:00:25.500 --> 01:00:28.039
If we return the grant, there's nothing that stops us as an

01:00:28.039 --> 01:00:30.769
organization from saying we're going to do public sales on

01:00:30.769 --> 01:00:31.500
our own terms.

01:00:31.500 --> 01:00:32.500
Sure.

01:00:32.500 --> 01:00:34.719
We've had a number of institutions approach our outreach

01:00:34.719 --> 01:00:37.119
department and say, hey, well, how are you guys coming with

01:00:37.119 --> 01:00:37.500
CNG?

01:00:37.500 --> 01:00:42.079
Everyone, to your point about the retail sales, everyone is

01:00:42.079 --> 01:00:44.500
waiting for someone to put in the infrastructure

01:00:44.500 --> 01:00:48.210
because that's the stranded capital that no one's going to

01:00:48.210 --> 01:00:50.500
recover by doing it on their own.

01:00:50.500 --> 01:00:51.500
That's the position that we're in.

01:00:51.500 --> 01:00:54.099
And so if we do complete the facility, we can certainly

01:00:54.099 --> 01:00:55.500
entertain those offers.

01:00:55.500 --> 01:00:58.409
We can approach some institutions like a UPS or DCTA and

01:00:58.409 --> 01:01:00.500
say, hey, we have this facility.

01:01:00.500 --> 01:01:02.500
We're open for business.

01:01:02.500 --> 01:01:04.130
And we could do that on a contract basis if that's

01:01:04.130 --> 01:01:05.500
something we wanted to entertain.

01:01:05.500 --> 01:01:06.500
Yeah.

01:01:06.500 --> 01:01:08.500
It makes it a little bit more controllable for us.

01:01:08.500 --> 01:01:09.500
Yeah, absolutely.

01:01:09.500 --> 01:01:10.500
Barbara?

01:01:10.500 --> 01:01:15.239
If I understand, the reason we considered CNG was because

01:01:15.239 --> 01:01:18.500
it was cleaner and it was more economical.

01:01:18.500 --> 01:01:21.659
And if I understand you now, you're telling us that with

01:01:21.659 --> 01:01:25.300
what they've done with diesel, that it's made it more

01:01:25.300 --> 01:01:26.500
attractive.

01:01:26.500 --> 01:01:28.500
Is that correct?

01:01:28.500 --> 01:01:29.500
I don't want to speak for Dr. Banks.

01:01:29.500 --> 01:01:32.500
I think it really -- can you correct me if I'm wrong?

01:01:32.500 --> 01:01:34.780
It really comes down to what do you want your environmental

01:01:34.780 --> 01:01:35.500
impacts to be?

01:01:35.500 --> 01:01:41.139
I think they're kind of negligible at this point, if I'm

01:01:41.139 --> 01:01:44.500
not speaking on a turn on that.

01:01:44.500 --> 01:01:48.500
And now the finance part of it is not there.

01:01:48.500 --> 01:01:49.500
Right.

01:01:49.500 --> 01:01:50.500
Right.

01:01:50.500 --> 01:01:56.409
And again, the gap has closed substantially between the

01:01:56.409 --> 01:01:58.500
biodiesel and CNG.

01:01:58.500 --> 01:02:03.139
And it really boils down to which environmental impact are

01:02:03.139 --> 01:02:05.500
you more concerned about.

01:02:05.500 --> 01:02:09.289
If you're concerned about the ground level ozone issue, CNG

01:02:09.289 --> 01:02:13.179
is a slightly better performer, but that gap has closed

01:02:13.179 --> 01:02:15.500
substantially since 2012.

01:02:15.500 --> 01:02:18.599
If you're looking at it from a greenhouse gas emissions

01:02:18.599 --> 01:02:23.179
standpoint, CNG is actually a worse platform from that

01:02:23.179 --> 01:02:24.500
perspective than B20 on a --

01:02:24.500 --> 01:02:29.500
especially on the short term, 20 years or so.

01:02:29.500 --> 01:02:33.849
So it's kind of a mixed outcome, but the new diesel

01:02:33.849 --> 01:02:38.199
platforms are not nearly as impacted from an ozone

01:02:38.199 --> 01:02:44.010
standpoint as the ones that we were looking at back in 2012

01:02:44.010 --> 01:02:44.500
.

01:02:44.500 --> 01:02:45.500
Okay. Thank you.

01:02:45.500 --> 01:02:46.500
Sure.

01:02:46.500 --> 01:02:48.500
Hi.

01:02:48.500 --> 01:02:50.500
Yes, Susan.

01:02:50.500 --> 01:02:53.829
Back to the grant, what other hooks do they have

01:02:53.829 --> 01:02:55.500
administratively?

01:02:55.500 --> 01:02:58.869
My experience with grants is they're really not worth the

01:02:58.869 --> 01:02:59.500
money.

01:02:59.500 --> 01:03:02.860
They're just -- you're reporting back to them for 20 years

01:03:02.860 --> 01:03:04.500
or whatever on this grant.

01:03:04.500 --> 01:03:05.500
Yeah.

01:03:05.500 --> 01:03:07.500
We've looked into it.

01:03:07.500 --> 01:03:11.320
I think the major one is that we are dedicated to this for

01:03:11.320 --> 01:03:12.500
three years.

01:03:12.500 --> 01:03:16.050
Now, if we get two years in and decide that we're out, then

01:03:16.050 --> 01:03:19.349
it is prorated in terms of what we would be refunding and

01:03:19.349 --> 01:03:20.500
returning.

01:03:20.500 --> 01:03:24.769
I think the real kickers with this is we could require

01:03:24.769 --> 01:03:29.519
people to register to use the site, but that doesn't limit

01:03:29.519 --> 01:03:30.500
access.

01:03:30.500 --> 01:03:33.889
It is anyone that wants to use it is really -- because when

01:03:33.889 --> 01:03:36.400
we looked at this, we thought if we could restrict public

01:03:36.400 --> 01:03:39.199
use to just those folks that know what they're doing out

01:03:39.199 --> 01:03:41.500
there, that we can get out and train them.

01:03:41.500 --> 01:03:44.030
These are only the pumps that you use and only during these

01:03:44.030 --> 01:03:44.500
hours.

01:03:44.500 --> 01:03:46.820
But with full public access, that brings into a lot of

01:03:46.820 --> 01:03:49.500
those uncertainties and risks that we had talked about.

01:03:49.500 --> 01:03:53.500
And so I'm not sure that there's additional hooks in there.

01:03:53.500 --> 01:03:55.500
I think the three years is the one thing that --

01:03:55.500 --> 01:03:57.500
And then you have to prorate it back.

01:03:57.500 --> 01:03:58.500
Then you have to prorate it back.

01:03:58.500 --> 01:04:01.400
And there are reporting requirements that we would have for

01:04:01.400 --> 01:04:04.150
at least that three-year period that they want to see some

01:04:04.150 --> 01:04:06.500
data on how well this thing is performing.

01:04:06.500 --> 01:04:09.519
And I think back to Randy's point, it is still tax money

01:04:09.519 --> 01:04:11.500
should we really be spending it.

01:04:11.500 --> 01:04:13.500
Right.

01:04:13.500 --> 01:04:16.829
Ethan, can you remind me what the initial assumption was in

01:04:16.829 --> 01:04:19.800
terms of public sales when this concept was initially

01:04:19.800 --> 01:04:20.500
created?

01:04:20.500 --> 01:04:21.500
In terms of revenue generation?

01:04:21.500 --> 01:04:24.500
Yeah.

01:04:24.500 --> 01:04:29.070
An estimate of it was at least $180,000 to $250,000 in the

01:04:29.070 --> 01:04:31.800
first couple of years, and that would balloon up to about

01:04:31.800 --> 01:04:33.500
half a million dollars in the out years.

01:04:33.500 --> 01:04:36.829
I don't think we get anywhere close to scratching that

01:04:36.829 --> 01:04:37.500
surface.

01:04:37.500 --> 01:04:40.300
I don't know off the top of my head what the margin was on

01:04:40.300 --> 01:04:43.500
that, but again, remember, we're buying this at cost.

01:04:43.500 --> 01:04:46.070
We're not going to get a quantity break, and we're also not

01:04:46.070 --> 01:04:48.539
going to see the additional revenues from the sale of the

01:04:48.539 --> 01:04:50.500
twizzlers and beef jerky like QT does.

01:04:50.500 --> 01:04:54.929
And so our profits are going to be solely based on what we

01:04:54.929 --> 01:04:59.500
can realize in terms of the margin on the fuel itself.

01:04:59.500 --> 01:05:02.829
So it's not something that is going to automatically flip

01:05:02.829 --> 01:05:07.150
this picture around for us, unfortunately, it would be my

01:05:07.150 --> 01:05:07.500
guess.

01:05:07.500 --> 01:05:12.829
Yeah, not until there's a price increase, there's a cost

01:05:12.829 --> 01:05:14.500
increase in diesel.

01:05:14.500 --> 01:05:16.500
I mean, right now, it's just too close.

01:05:16.500 --> 01:05:17.500
There's not a demand for it.

01:05:17.500 --> 01:05:18.500
Right.

01:05:18.500 --> 01:05:22.500
For that.

01:05:22.500 --> 01:05:31.500
Okay. Any other questions, comments, direction?

01:05:31.500 --> 01:05:33.500
What's our recommendation?

01:05:33.500 --> 01:05:37.500
So we will continue.

01:05:37.500 --> 01:05:41.289
We'll continue planning the options, and we'll also touch

01:05:41.289 --> 01:05:44.599
base with some of our larger commercial customers here and

01:05:44.599 --> 01:05:48.030
see if there's a possibility of reaching a deal to share

01:05:48.030 --> 01:05:49.500
any infrastructure they might have.

01:05:49.500 --> 01:05:55.500
And as part of that analysis, we'll bring it back.

01:05:55.500 --> 01:05:57.500
Yeah, good.

01:05:57.500 --> 01:06:01.500
Any add ons to that?

01:06:01.500 --> 01:06:02.500
Thank you very much.

01:06:02.500 --> 01:06:08.500
Okay. Thank you.

01:06:08.500 --> 01:06:23.500
Okay.

01:06:23.500 --> 01:06:29.440
Any items, any, any comments or inquiries from the public

01:06:29.440 --> 01:06:34.920
utility board or the public of any clarification on any

01:06:34.920 --> 01:06:40.519
policy or any upcoming meeting or to put place them out on

01:06:40.519 --> 01:06:44.500
the agenda for an upcoming meeting.

01:06:44.500 --> 01:06:46.500
General comments.

01:06:46.500 --> 01:06:48.500
Hearing none.

01:06:48.500 --> 01:06:50.500
Okay.

01:06:50.500 --> 01:06:56.000
All right. At this time, we'll go into closed meeting at 10

01:06:56.000 --> 01:06:56.500
08.