Aldermen, Board of

Mayor Lozeau made the following presentation before the Board of Aldermen on Tuesday, November 23, 2010 at 6:30 p.m. in the Aldermanic Chamber. President Brian S. McCarthy presided. Members of the Board of Aldermen in attendance: Alderman-at-Large Brian S. McCarthy, President Alderman-at-Large Ben Clemons, Vice President Alderman-at-Large David W. Deane Alderman-at-Large Barbara Pressly Alderman Michael J. Tabacsko Alderman Diane Sheehan Alderman Richard P. Flynn Alderman-at-Large Mark S. Cookson Also in Attendance: Michael Manning, Director of Mkt. and Business Devel., AVSG LP PRESENTATION Compressed Natural Gas (CNG) Vehicles Mayor Lozeau Thank you everybody for coming tonight. I was looking for an opportunity to present our CNG plan to the members of the Board and thought that the best way to do that might be before a Full Board meeting so for those of you that could make it tonight I really appreciate it. I would like to give you kind of a snapshot of where we have been and where we are headed and then introduce the crew on the bench over there. Then we will have a presentation for probably 20 minutes or so and then open it up for questions from the group. As many of you know for some time now we have been talking about some of the alternative fuel vehicles that we could look at in the city not only because of their environmental friendly nature, but also because they are potentially cost effective as well, and I think the right direction that we want the city to go in. We have, over the years, talked about different things that we as a city are doing surrounding energy issues whether it is the new windows at City Hall and the new roof or the vehicles that I just mentioned now, but other efficiencies that we can realize from this. I am very excited to present to you more information about CNG, which stands for Compressed Natural Gas, and why vehicles that use compressed natural gas may be a very good option for the city. As some of you may know the Board of Public Works adopted the legislation that was pending from the State for dollars to be used towards the purchase of CNG vehicles, and it is before this board and the Finance Committee as well to look at those dollars and to contract for services. When we started heading down the CNG path, I put together a team of staff members, senior staff members, led by Susan Valaitis our Director of CitiStat because when you look at performance efficiencies, that is the place I go, Lisa Fauteux, from our solid waste department. She is our Superintendent there. It is her vehicles that we are looking primarily right now for our first group of vehicles. Some of you may know there are 16 vehicles that are at the landfill, we have 6 off the road now so we are in desperate need, which I think we did a successful job in pointing that out to you in the fleet assessment that we did some time ago. And Nick Caggiano our Superintendent of Parks & Recreation, I asked him to be on the team as well. Nick is driving one of our new hybrid vehicles and is very interested with alternatives especially in the Park & Recreation Department. I guess if you are going to talk green you can’t not think of Park & Recreation. Compressed Natural Gas Presentation 2 11-23-10 That group worked for the last 8 months or so, they have gone to different locations to look at fueling stations, they have looked at different vehicles, they have talked to manufacturers, they have talked to companies, they put the RFP together, sent it out, evaluated them when they came back, have made recommendations surrounding that, and have really learned more about CNG than I think they ever thought they would. A company named AVSG is one of the companies that responded to our RFP and is the company that we intend to go with. Mike Manning is here from AVSG. He is an industry leader for CNG focused in the Northeast as is his company. Mike has been with AVSG for two years and prior to that for 15 years he was with Boston Gas and Keyspan. He has been a key resource for our team and has provided them with locations that they should look at and things like that. Mr. Manning is going to come up and give you an overview of CNG. I should let you know that the site that we are looking at to locate this CNG gas station is behind our Riverside facility and near our transit facility on Riverside Drive. We had a consultant that worked with us and looked at three different sites; one was our streets garage area, one was the site I just mentioned, and one was a piece of State owned land right off the highway at Exit 5. For those of us that have been around a long time it used to be the Exit off of Exit 5 and now there is like a little cul-de-sac down there between the cemetery and the police station to the left of that. Those were the three areas that we looked at. The piece between transit and public works seems to be the best piece for this location. With that, I am going to ask Mike Manning to come up. The laptop is set up for you for your presentation, and if we let him get through the presentation then we will open it up for questions. Michael Manning Thanks Mayor, thanks to the Board for having me this evening. As the Mayor mentioned I have been in this industry for about 18 years. I was originally with Boston Gas and the company became Keyspan and National Grid, and then I joined AVSG just about two years ago. I can tell you and I will explain how; I haven’t used gasoline since 1995. I do a lot of walking, but not that much walking. I do have an automobile, but it runs strictly on compressed natural gas, and I will explain how. Just a brief history of how AVSG came to be and how we got involved with the City of Nashua; the company was actually founded in 1992. It is based in Boston in the navy yard in Charlestown. It is one of 5 or 6 companies in North America that has the capability of designing, building, operating, and maintaining compressed natural gas refilling stations. Our first major project was the CNG station at Logan International Airport. That was built in the summer of 1995. It has been operating continuously since then. MassPort, the Logan Airport Authority has 32 buses, they run 24/7, 365, and then have been running on CNG since October of 1995. Our mission, and this is our only business, is to deploy CNG vehicles across New England, and when we deploy vehicles obviously we have to build stations so we have really been in the station building business or working right with fleets to convince them on the merits of compressed natural gas. Since 1995 we have built a network of 12 public access CNG stations primarily in Massachusetts and Rhode Island and then 60 private access CNG stations. These are smaller stations usually on private property that are not open to the public, are really for that fleet and that fleet’s use only. We have been working with the Mayor, her staff, her department heads I think we began in April and we have met numerous times, we have had presentations, the Mayor’s staff has come to our CNG stations; one in Tewksbury where we refuel the buses for the Lowell Regional Transit Authority and then we actually went all the way into Boston and saw that station at MassPort. We really look forward to working closely with the Compressed Natural Gas Presentation 3 11-23-10 City of Nashua as we expand this CNG infrastructure northward from Tewksbury up through New Hampshire. Just to talk about CNG; what it is and what are alternative fuels, these are all transportation fuels that are defined by the Federal Government U.S. Department of Energy that is the department that has final say on what an alternative fuel can be. You have probably heard about bio-diesel, it is a mix of diesel fuel combined with soy byproduct, and in some cases if it is not soy it can be white or yellow grease, it is a combination of the two liquids with diesel fuel. There is quite a lot of activity in New England with bio-diesel. Electricity; pretty self explanatory, these are electric vehicles. They haven’t had a huge impact here in New England primarily because of our climate. They work well in the west and Southwest, but they don’t work that well, pure electric vehicles I am talking about, here in the Northeast. Ethanol is E-85 that is an alcohol based fuel, very popular in the Midwest where it is actually manufactured. It is a byproduct of corn and corn waste. Hydrogen is a fuel that we talk about for the future. It is a byproduct of natural gas and it comes in two forms; either compressed or liquefied. The fuel most of us deal with day-to-day is propane; the technical name is LPG, Liquefied Petroleum Gas. This is a fuel that most Americans use in their barbecues. It can be called bottled gas, propane, but the technical name is LPG. Then the fuel we are talking about tonight is natural gas. This is the same gas that is piped into your home or your business and you use typically for heating and hot water and so forth. There are also two forms of natural gas for transportation; one is CNG, Compressed Natural Gas and the other is LNG, Liquefied Natural Gas. Tonight’s presentation will strictly be on CNG, Compressed Natural Gas. So what is CNG? The nice thing about it is most Americans are fairly familiar with is. It is the compressed form of natural gas. Many of us use it for heating, hot water, cooking, drying our close, lighting fireplaces, and so on and so forth. The reason we have to compress it is we need to take a very large volume of a gas and basically compress it down so we can get it on board a vehicle. Otherwise this market never would have developed until we could get a large body of gas to make a trip worthwhile in a compressed natural gas vehicle. A lot of discussion these days about natural gas and how it could solve American’s energy future. It is primarily a domestic product. 95% of the natural gas here in the greater Nashua area is domestic, it either comes from the Gulf Coast States of the United States or from Central Canada, and it is piped all that way, 36” and 48” diameter pipes bring that natural gas from the wells all the way from Alberta or the Gulf Coast States right here to New England, specifically Nashua and Boston. By the way the U.S. Department of Energy considers transportation of natural gas via underground pipeline one of the safest ways to transport fuels; pretty much impervious to weather and so on and so forth. Natural gas is very abundant in North America. If you saw 60 Minutes two Sunday nights ago the leadoff story was about how much natural gas has now been discovered in the Northeast, which is news because primarily again most of the natural gas in North America previously was in the Gulf Coast States or in Suffolk, Canada. Today they discovered it in lower New York State and upper Pennsylvania, huge reserves, well over 100 years of natural gas, trillions of cubic feet of natural gas. And today with this new drilling technology 27 states out of the 48 contiguous states in the United States can produce natural gas. Just talking about the fuel itself, natural gas is similar to helium, it is a lighter than air gas. It is clear, colorless, and odorless. It has no odor coming out of the ground. The odor you would smell if there were to be a leak of natural gas was actually injected into the natural gas by the pipeline and the local gas companies to allow the public to realize that natural gas was leaking. From the ground, natural gas is completely odorless and colorless. I mentioned lighter than air. You can touch natural gas, you can inhale it, you wouldn’t want to make a habit of inhaling natural gas, but you can inhale it and it should have no bad side effects. The primary product of Compressed Natural Gas Presentation 4 11-23-10 combustion of natural gas, when you burn natural gas in your furnace or your dryer or in the automobile I came here tonight in, it is water vapor and that is one of the key aspects of natural gas. It is domestic and when you combust it in an engine the primary mission of the tailpipe is water vapor. We will talk more about vehicles, but as of this year almost every North American manufacturer of vehicles; heavy duty, medium duty, light duty, they offer CNG vehicles for sale. The other great thing about natural gas is at the stations, and again I will talk more about the stations, is the dispensed price of natural gas stays very constant over many months and in some cases years. Just looking at the price of natural gas over the last ten years, and this is actually dispensed price at a station. I went back to our records at AVSG and looked at what we were dispensing for compressed natural gas at Logan International Airport in year 2000. It was $2.00, and you can see it has remained fairly constant. It never exceeded $3.00. You can see how diesel can have huge springs, huge variations in price and you can see diesel jumped up during Katrina, 2005/2006 and then two summers ago in 2008 a huge increase in diesel, diesel went to almost $5.35 a gallon. I think on this graph you can see CNG is a much more stable price fuel than diesel. Just some facts on the environmental; I won’t delve into all of the details. I talked about the primary component of the emission on the CNG is water vapor. We have 95% less Particulate Matter. Particulate Matter or PM is the brown or black soot that you see typically coming from older diesel vehicles. It is toxic and unfortunately it is deemed a carcinogen by the U.S. EPA. We have 90% less carbon monoxide. Carbon monoxide is a clear, odorless, but very lethal gas. It comes from the incomplete combustion of any fuel, could be wood, natural gas, oil. With natural gas when it is burned properly we have 90% less carbon monoxide. Then we also have 75% less nitrogen oxide. Nitrogen oxide is another byproduct of combustion of fossil fuel. Nitrogen oxide if released into the atmosphere it combines with sunlight and actually causes what we call O-Zone, most people call it smog, where you have pollution. On CNG vehicles on non-regulated emissions the Federal Government does not regulate this emission; it is called carbon dioxide (CO2). It is a greenhouse gas and CNG vehicles we made about 20% CO2 compared to diesel vehicles, which are typically heavy duty vehicles and 30% less than gasoline vehicles. Another nice aspect of CNG vehicles is their sound emissions, 50% quieter than diesel trucks. That is because CNG engines are typically spark ignited they are not compression ignited so they are relatively quiet like gasoline vehicles. Today in New England CNG is the most prevalent alternative fuel in use. That is primarily due to the MBTA in Boston. They have 400 CNG buses that have been rolling everyday since 2002. They consume about 4 million gallons of CNG annually. That is the MBTA. If you look worldwide CNG is the fastest growing automotive fuel on the planet. That is because many countries have access to natural gas and they are trying to get away from oil, they are trying to get away from diesel and gasoline, and switching over to natural gas. I just want to talk about the stations briefly, and you can see that is a photograph of one of our stations. That is in Newton, MA on I95 southbound in the rest area. From a distance I don’t think anyone could tell it is different from a gasoline station. For all intents and purposes it looks and behaves just like a gasoline station. We require no fuel deliveries though. If a gasoline station is diesel big tanker trucks come in and offload fuel. With compressed natural gas we tap into the underground infrastructure that exists today so we have no truck deliveries bringing natural gas to the site, it is strictly taking natural gas from the underground pipes, bringing it into our station where we compress it, store it, and then dispense it. We do store some CNG aboveground. A typical station only stores about 300 gallons equivalent of gasoline or diesel so we have no huge storage of CNG. As vehicles come to the station they draw CNG from the Compressed Natural Gas Presentation 5 11-23-10 dispenser and it is replenished in storage. Another key aspect of CNG stations is, and fire departments like this, we do not store tends of thousands of gallons of fuel at the site. Again, it is typically 300, could be 500, but 300 gallons equivalent is a typical figure. I talked earlier about natural gas being similar to helium. If there were to be a leak at the station natural gas is lighter than air, it is going to dissipate very very quickly and go into the atmosphere. That typically does not happen. We do our best to keep CNG within the system, but if it were to leak it would go directly to atmosphere. After 18 years of being involved in building stations we basically, where I have this down to a science, we need to find a location that has fairly high gas pressure in the street. That would be National Grid’s piping in this area. We would work directly with National Grid to determine what is the pressure in the pipes at a certain street to determine whether that site is viable or not for CNG. We also because we do compress the gas, we have compressors that run on electricity, we need fairly high power electricity. We typically look for 460 volts of 3 phase electric power in order to power our stations. Obviously because we are working with the City and the City is going to be our primary customer we have to be somewhat near the City of Nashua fleet facilities. Just talking about station economics, AVSG will bear the cost of permitting, designing, building, operating, maintaining, the4 CNG station here in Nashua for the life of this station or the life of the contract. The City in partnership will provide the land, some site improvements, and also the key aspect, the initial demand for the station because without an initial demand financially AVSG or any other company could not build a station so it is critical that the City provide our initial demand for the station. In partnership, we will work with the City to reach out to other fleets. The Mayor has spent quite a bit of time with UPS. My former employer is National Grid, they have quite a few natural gas vehicles and are working to expand into New Hampshire, but because of the lack of infrastructure National Grid and other companies can’t do that at this point in time. Working with the Mayor’s staff and the Mayor who will reach out to more and more fleets and hopefully convince them on the merits of compressed natural gas and see if we can increase the load of the station. Our stations and you saw again it looks very similar to a gasoline station; we have dispensers that look and are actually manufactured by the same company that builds dispensers for gasoline. Our stations accept MasterCard, Visa, Wright Express, and PHH. Those are the most common fleet and credit cards. We also offer AVSG has its own card, it is a fuel card it is really not a credit card, it is not a debit card, it is only good for the purchase of CNG at our stations. We can offer that to fleets as well. To switch gears and talk on vehicle economics; currently the City of Nashua pays $2.65 per gallon of diesel fuel. CNG is approximately $.35 less expensive. For nine CNG trash trucks and that is what the solid waste division is looking at ordering initially, it is approximately $15,000 in savings per year. In addition, and I will get into the maintenance in a little more detail, CNG trash trucks require less maintenance than diesel trash trucks, and again I will get into that in more detail. There is savings in maintenance for the vehicle fleet as well. As you saw on the graph when I started, CNG price stays very stable over time, over ten years as a matter of fact. As more and more fleets use CNG we can offer a better and discounted price at the station. Also as part of the agreement, we are looking for the City to receive a portion of non-City of Nashua fleet revenue. This would be UPS or other fleets that come into the City of Nashua to refuel. The City would see a percentage of those sales. Compressed Natural Gas Presentation 6 11-23-10 Right now California is really the center of the CNG industry. Most school departments, most sanitation departments have made the transition to CNG, but here on the East Coast there is a hot spot of activity on Long Island and these communities have all made the switch to compressed natural gas recycling and trash hauling vehicles somewhat based on the environment but really based on the economics. These are towns like Smithtown, Brookhaven, Oyster Bay, Islip, Huntington, and Hempstead. Over the last three years they have all made inroads into CNG retiring their diesel vehicles and substituting with ones that run on compressed natural gas. Within the City of Nashua, the City has applied for funding from the US EPA, the Environmental Protection Agency, which has funding called DERA. That stands for the Diesel Emission Reduction Act, signed by the President just about a year and a half ago, and what this funding does is the City will pay the base cost per vehicle so whatever Lisa and her staff have been paying for those trash trucks in the past, they will still pay the base cost, but the CNG option cost will be paid by the Federal Government. That is how EPA works to reduce emissions of diesel vehicles is to replace diesel vehicles with compressed natural gas versions. Any future CNG vehicle options cost whether it is the trash trucks of other vehicles in the City’s fleet could be funded by a whole array of federal incentives. Right now there are existing federal tax credits. These are typically based on the weight of the vehicle. The Federal Government wants to see heavier vehicles replaced because they cause the most pollution in the country. Right now there is a whole array of federal tax credits available. The City is tax exempt so the City really can’t take part of these, but the other fleets such as UPS, National Grid can absolutely take part of these federal tax credits that are as high as $32,000 per vehicle to defray part of the CNG option costs on really any size vehicle; a Honda Civic all the way up to a 30’ or 40’ long transit bus. I talked about the US EPA. One of its twin agencies within the federal government is US DOE, the Department of Energy. They have clean cities funding. Again, this funding is set up to defray the costs of alternative fuel vehicles because alternative fuel vehicles aren’t produced in the numbers that gasoline and diesel vehicles currently are. We’re at a price disadvantage and the Federal Government is working to defray that cost. You may have heard about the Natural Gas Act that is pending in Washington. That would actually have rebates so the City’s tax status wouldn’t matter if the Natural Gas Act gets passed. The City could apply for rebates and the tax status becomes a non-issue. Senator Harry Reid also has a Bill. There is just a lot of activity in Washington around alternative fuels for transportation these days. Senator Harry Reid has a Bill again pending in Washington that would provide funding for alternative fuel vehicles such as compressed natural gas. Just to educate the Board and the public on what we look for in the CNG market, when we look at CNG for the proper applications our primary goal is to look in this order; we look at transportation first; transit buses in Massachusetts and Rhode Island there are organizations called TMAs, Transportation Management Associations, they are usually located in hubs of employment where a TMA is set up to provide commuter options. This bus is a 35’ CNG powered bus that operates in Cambridge, MA. It provides transportation services between the MBTA subway stops and MIT, Amgen, Inc., Biogen Idec, Inc., Novartis, Wyatt it is right in the heart of the biotech industry in Cambridge. I talked about Logan International Airport having that first CNG station built in 1995. Airports obviously would be a key aspect of our outreach here in New Hampshire and hotel shuttles. Hotel shuttles we have a number in Boston at Logan International Airport running on CNG. They actually receive a discount from MassPort, the Airport Authority, for deploying compressed natural gas for all of their shuttle buses. Compressed Natural Gas Presentation 7 11-23-10 Delivery vehicles; as I had mentioned the Mayor has talked in depth with UPS, but it is just not package, it could be beverage; Pepsi, Coca-Cola, it could be linen, it could be dry goods, could be UPS, could be Federal Express and so on and so forth. Waste; absolutely one of the largest markets for CNG in the country; California I mentioned is the leader, now New York State with Long Island making huge inroads into compressed natural gas trash and recycling trucks. Utilities; National Grid, UniTel, they are actually under a mandate by the Federal Government because they are an energy provider, to make a transition to alternative fuels such as CNG. We also can do off-road applications. We work with a lot of industrial customers that have fork trucks that run on either gasoline or propane and if you have ever been in a Home Depot when a propane power fork truck drives by you, you know it because it has a fairly obnoxious smell. We have a lot of companies looking at CNG to replace their diesel or propane power fork trucks. Finally the last part that we look at, and we have a number of rinks in Connecticut, Massachusetts, and actually the skating rink in Salem, NH operates on a compressed natural gas powered we could call it Zamboni, but technically they are ice resurfacers. Deploying CNG Vehicles; I will talk about the solid waste trash trucks. Every major manufacturer of trash and recycling vehicles offers CNG as an option now. We have AutoCar, Freightline, Crane Carrier, McNeilus, Peterbuilt, and Mack. I am sure if you are not aware of their trash trucks you have seen Mack and Peterbuilt trucks, they are the predominant trucks on the highway. They are all available with this engine and this engine is by a company called Cummins-Westport and it is a 9 liter engine, a fairly hefty engine. The Cummins-Westport engine is 9 liters; it is the largest and cleanest heavy-duty engine in the world today. Cummins-Westport is putting about 6,000 of these engines on the market a year. It is really the key aspect of the heavy-duty market. I talked briefly about maintenance free. If you order a new diesel truck today the maintenance of the exhaust system is pretty onerous these days. With CNG there is a maintenance free exhaust system and again it is primarily because the exhaust of a natural gas vehicle is primarily water vapor. CNG engines I mentioned briefly are spark-ignited engines very similar to gasoline, much quieter than their diesel counterpart so when these trash trucks are deployed in Nashua the residents and the drivers will have a noticeable benefit from sound reduction. We’re a Boston based company, but we’re covering all 6 New England states. I am just going to talk briefly about what is happening in New Hampshire. We were just awarded a contract to upgrade an existing CNG station Stickney Avenue I believe it is Exit 14 off of I93. It is owned by the State, it is private access only so no fleets but the State can use it. We have been awarded a contract to upgrade that station, select the other stations that can accept credit cards; MasterCard, Visa, Wright Express, PHH and so on and so forth. That station has to be completed by December 31st of this year and so we are working on it as we speak. In Durham, we have been awarded a contract, similar situation; University of New Hampshire has a private access CNG station in Durham. We are going to upgrade that to public access again by the end of this year. A related project in the trash industry, we have broken ground for Casella Waste Systems, which does have a presence here in New Hampshire. We broke ground on a station for them in South Burlington. It is actually Williston, but most people know it as South Burlington. It will be Casella Waste Systems first CNG Compressed Natural Gas Presentation 8 11-23-10 station. The owner is John Casella and he has made a statement that his company will no longer purchase or procure diesel trash trucks that they will be CNG from this point forward. This is not my grandfather. Though I have been in the CNG industry almost 20 years now, this is a photograph of Mr. Cox. Mr. Cox I assume owned, I can’t imagine he is still alive, he owned a farm in West Virginia. There was natural gas on his farm and he tapped that gas reservoir, he had Mrs. Cox fabricate or sew this canvass bag and he filled it up with natural gas, and in theory there is nothing wrong with this setup. He has taken a very clean fuel, piping it probably via rubber hose directly to his engine and driving in West Virginia. Now today obviously on the Turnpike of Route 3 that would not go over well with the State Police. This is what I have been driving for five years. This is a Honda Civic GX, the G standing for gas. I have been driving this particular automobile for about 4 years now. Same concept, natural gas, it is stored in a cylinder though not a canvass bag, it is stored in what looks like a scuba tank. It is right beneath the rear deck and that stores the equivalent of 8 gallons of gasoline. The car is very efficient, gets almost 40 miles to the gallon so I have a range of about 300-335 miles somewhere around there. If you have any questions either tonight, later, this is my contact information. Again, we are in the navy yard in Boston. My e-mail address is mm@avsglp.com. I can answer questions right now, but if you feel you want to follow up at a later point I would be available. Mayor Lozeau Why don’t we open it up to questions in case members have questions? Alderman Deane Thank you. I have a lot of questions, but I am not going to ask them all tonight. We will have other opportunities. It is interesting that you mentioned helium. I am sure you are well aware that there is only a 20 year supply of helium left on the planet. Michael Manning That is correct. Alderman Deane There are going to be a lot of disappointed children a few years down the road along with balloon manufacturers. Michael Manning I can’t recommend Alderman that they fill those balloons with natural gas. Alderman Deane I wouldn’t want you to recommend that either. I have a question on when you take natural gas out of the ground and compress it what is the ratio used to create a gallon of compressed natural gas? Compressed Natural Gas Presentation 9 11-23-10 Michael Manning When we take natural gas out of the ground and I will use our proposed site in Nashua, National Grid has a pipe in the street that is rated to 60 PSI, we will take and pressurize that gas and we will take 123.55 cubic feet of natural gas, which if you can just imagine if I could cube myself I would say 5’ x 5’ x 5’, 123 of my 5 cubic feet of natural gas is the equivalent of 1 gallon’s energy content of gasoline. That natural gas, if you could weigh it, weighs 5.66 pounds. Alderman Deane Thank you for that. The other question I have is the stations up at UNH and up in Concord I believe, are those owned by the State? Michael Manning Correct. Alderman Deane So when you go up and do this work to them are you taking ownership of those facilities? Michael Manning We are not. This was a bid or an RFP strictly for a company to upgrade the stations to full public access. AVSG will have no financial investment in the station perse except just to bring it up to today’s standards. Alderman Deane How long does it take to fuel say one of these trash trucks that we are talking about replacing? Michael Manning Approximately 15 minutes. Alderman Deane And that is with 300 gallons of supply on board. Michael Manning Three hundred gallons of storage at the station correct. Alderman Lozeau It is about the same time as it takes to fuel it with diesel. Michael Manning Right. … audio inaudible… came to our Tewksbury CNG station and we actually had … Compressed Natural Gas Presentation 10 11-23-10 Alderman Deane What is the timeline on compressing 123.55 cubic feet into a gallon, how long does that take? Michael Manning We can compress hundreds of cubic feet of natural gas in minutes. It is a function of the size of the compressors that we have in our stations. Alderman Deane So the sizing of the compressors you would have to get something in there that is going to push the perceived volume or the demand that the City has to supply you or has to purchase X amount of gallons to make it worth your while? Michael Manning That is true of any … Alderman Deane I know but we haven’t been in the business of owning filling stations. When we purchase our fuels they are stored at our street department, we’re exempt of the taxes, and we just pump out of the stations in to the vehicles. Mayor Lozeau Alderman Deane in this instance we are not going to own the station, we are not proposing to own the station, but the rest of the question is… Michael Manning Correct. The station in Nashua will be owned, operated, maintained by AVSG. The City will come and other fleets hopefully will come to the station, refuel, make the payment, and then be on their way. Alderman Deane What is the total volume that is needed to make this work? How many gallons of fuel do we have to commit to or has to be committed to in order for you to put a station in to be utilized? Michael Manning We feel comfortable with the 9 CNG trash trucks and usage that Lisa and her staff have provided to us. Alderman Deane So we don’t need UPS or linen companies or ice cream trucks or anybody else, our 9 trucks will satisfy the cost of maintenance and operations of a facility here? Compressed Natural Gas Presentation 11 11-23-10 Michael Manning At least initially. We would definitely like to see follow on fleets. The reason I say that is because we can’t gauge where electric costs will be two years from now or three years from now and the same with natural gas, and those costs are to be borne by AVSG so we definitely want to see more fleets so we can like any fuel, we want to see volume to keep our costs low. Alderman Deane I’m kind of confused because if you look at what is happening in the natural gas market right now it is plummeting, and I think you brought up some good points about the supply and demand and there is just an abundance of it now, why would you not put in a natural gas powered generator to produce electricity for the compressor instead of purchasing natural gas off the grid from Public Service of New Hampshire? Michael Manning The reason we are going with electric drive compressors versus natural gas drives, in our climate natural gas engines to produce electricity in an outdoor application can be very very maintenance intense especially in the winter months. They run great in the summer months, but as the temperature begins to drop engines running on natural gas for station purposes get to be very very maintenance intense. Alderman Deane Why couldn’t they be confined in a facility? Michael Manning They can be, but the reliability of an electric motor versus a gas engine in our climate you just really can’t compare the two. Alderman Deane What do you mean the reliability? I’m saying if you took the generator and you housed it in a conditioned space say similar to what makes it run the best why wouldn’t that engine function at a better rate as compared to…I understand leaving it outside and it is 20 degrees below zero, metal has issues and things, but why couldn’t you confine the engine and produce power with the natural gas that runs the compressors to compress the natural gas? Michael Manning I guess it would just be a second piece of equipment where there could be a failure. Mayor Lozeau Also probably have some space issues. Michael Manning For twenty years Alderman we have been running CNG stations in five states and this is the motor block that run that and were chosen and seem to be successful. We have been running Logan International Compressed Natural Gas Presentation 12 11-23-10 Airport since 1995 with busing running basically around the clock and we have never had an issue with not getting them fuel. The equipment we have designed and chosen seems to work well. Alderman Deane I am just looking at, as you had brought up earlier, the gas market. The abundance of gas and granted a lot of the power companies use it, I know PSNH shut down some of their coal burning plants because of the cost of natural gas had dropped so much yeah they sent all of those people home. That is what I am getting at, instead of paying their rates. If they are burning coal or natural gas to produce electricity my electric bill isn’t going down they are making more money. They are not going to say hey natural gas has dropped we are going to drop your electric rates, that is not happening. That is what I am getting at with the motor. We could see instead of paying $2.30 a gallon for compressed natural gas perhaps it could be even cheaper. Michael Manning Potentially, but again we have been very successful with the equipment we have chosen, purchasing electricity, purchasing natural gas, but we purchase natural gas from the local gas company. If you buy it on line you get a lot more flexibility. So if our gas costs particularly less by buying it on the market from a local gas company. Alderman Deane Well any big user is going to do that… Michael Manning Absolutely. Alderman Deane The City does it. I have dabbled in it somewhat. It is very interesting except a lot of those brokers are like piranhas once you contact them they don’t go away, but you can pit them against one another and you can get some good deals going. Michael Manning Right and there are companies like Hess and Sprague and Supreme Energy, which are very good firms to work with and we happen to buy our natural gas from Sprague Energy, which has been around for decades, and again many cities, many towns, many private industries buy their natural gas directly from a marketer and not from their local gas company. Alderman Deane Thank you Mayor and Alderman McCarthy, I would like to give somebody else a chance. I have other questions, but I will wait. Alderman Tabacsko Thank you. I think this is a fascinating idea and I want to be supportive of it. I want to understand this model that we are talking about your company continues to own the facility, I got that from this. Aside from the additional cost of the vehicles, do we have a feel for what kind of other up-front cost is associated to the Compressed Natural Gas Presentation 13 11-23-10 City? It is just a you put the thing in based on our commitment to maintain a fleet of X size that is going to give the numbers that you need to justify it? Michael Manning Make it financially viable. Alderman Tabacsko Right and somewhere in there the City would get a piece of the additional sales to… Mayor Lozeau Of any other company outside of city vehicles that we can partner with to bring into the station, and as Mike mentioned we have been talking with UPS, they are very interested. This is one of the few communities, one of the few states where they don’t have alternative vehicles, and this location works very well for them. Alderman Tabacsko Are we looking at this as a potential revenue stream that is positive? It sounds like there is a real good potential here and I want to make sure we don’t lose the opportunity to build something into this that if we can go out and generate additional fleets that are coming in that our piece gets bigger, some sort of an incentive. I am in sales and that is how my world works. Mayor Lozeau We have been negotiating. Michael Manning I would love to see that happen Alderman, but I can tell you I began working in this industry back in 1993 and a lot of people to this day still do not know what CNG is, that it can power a vehicle as buses, trash trucks. It is a long education process. I have spent I would say a good portion of those 17 years in meetings like this or smaller meetings with private companies trying to explain the benefits of natural gas. Is there potential here in the City, is there potential here in the State, absolutely. Is it going to happen overnight? Even my family says Dad you are the most patient engineer on the planet. This will not happen overnight Alderman, but we see UNH, the State, what is happening in Connecticut, Massachusetts… Mayor Lozeau Verizon, AT&T have just passed things. Alderman Tabacsko It just seems to me that as the search for alternative fuels continues and as that evolution moves forward, this seems to be a very natural progression in that, and I think that going forward it may not be overnight but it certainly would seem to be in the foreseeable future something that would be appealing and viable to a lot of potential fleet operators. Compressed Natural Gas Presentation 14 11-23-10 Mayor Lozeau I agree and I think that this is the first way down the path where people will find it easy to look at these kinds of fleets if there is a place in town where they can fuel up. The biggest challenge is the one that you identified at the beginning and that is the cost differential between a CNG vehicle and a diesel vehicle. That is really where the struggle is right now. Because we have the federal dollars for the initiative, it is something that we don’t have to be concerned with, but that doesn’t mean that I am foolish enough not to think so five years from now when that money is gone and I want to buy the next however many vehicles and that money is not there can we justify at that point buying those vehicles and investing that extra money. We believe we can one way or another. Alderman Tabacsko What is that differential right now on the trash trucks? Mayor Lozeau About $30,000. Alderman Tabacsko What is the range $200,000, $250,000? Mayor Lozeau About $180,000 give or take. I am looking at Lisa who is hiding behind Mike. Did I get that about right about $180,000? Alderman Deane Two million two hundred and ninety six thousand two hundred and fifty nine dollars for CNG… Mayor Lozeau That is from all of them. Alderman Deane …or $1,845,724 for diesel. Mayor Lozeau That is for all of the vehicles though. It is not one. Alderman Deane All of the vehicles combined they want to purchase. Mayor Lozeau Right. Compressed Natural Gas Presentation 15 11-23-10 Alderman Tabacsko Thank you. Mayor Lozeau It is approximately $180,000. Alderman Sheehan Thank you. The question I have is regarding should something go wrong type of…where is the next closest station should we have to change stations for a couple of days and servicing of the vehicles? Mayor Lozeau There is a portable station that Mike can tell you a little bit about. Alderman Sheehan Sorry I joined a little bit late. Michael Manning Each one of our stations has the capability of being backed up by a portable CNG trailer. This trailer is towable, it would come to the site, it provides compression, it needs no AC power so if AC power is what has shut the station down let’s say in Nashua, this compressor is actually battery started, automotive batter, it will start turning over and will bring the natural gas from the meter into our trailer, the trailer will compress the gas, and put it directly into storage. We have 6 of these trailers. They are scattered throughout New England just because of the amount of users we have, but within 2 hours or less we can have a trailer here in Nashua connected to the station, hit the start button, and again no AC power is required, and we can start compressing gas hopefully within a two-hour timeframe. Alderman Sheehan And for repair of the vehicles, which have a two-year warrantee? Michael Manning Right. The repair of the vehicles, the vehicles for all intents and purposes outside of the CNG engine and the CNG storage are virtually identical to a diesel truck. The fleet mechanics here in the City will have to be trained. They will get general training on working with the Nashua Community College. I was actually at their facility a week ago Friday to talk about being a training site for alternative fuels right at Nashua Community College. They were thrilled. I know the Mayor had spoken with the President. They are on board. But then the mechanics would have to get more detailed training from Cummins-Westport the engine manufacturer, and that would be provided by the local Cummins-Westport dealer. Alderman Sheehan Thank you. Compressed Natural Gas Presentation 16 11-23-10 President McCarthy How many of those trailers have you ever had deployed at once? Michael Manning There was an ice storm once. President McCarthy That is why I ask. Michael Manning Of the 6 we had 3 in operation during that ice storm. President McCarthy We have been known to lose power for periods of days. Alderman Sheehan If not weeks. Alderman Flynn I think I had the same kind of question. I am all set. Mayor Lozeau If there are other questions from members by all means if you want to get them to me I will make sure that we can get answers as soon as possible. I anticipate the Finance Committee looking at the contract for these CNG vehicles at the next Finance Committee meeting. Then the contract for the station probably within the next month or so we will have something that we can get out and start talking about. This is new territory and certainly anybody that is interested in it and wants to know more…Alderman Deane I know this is the second time you have mentioned you have a lot of questions so any of those you can get us ahead of time so we can have answers… Alderman Deane I have his e-mail address, I wrote it down. I can send him the questions. Thank you.  City of Nashua Board of Aldermen Michael (Mike) Manning Director of Marketing and Business Development AVSG LP Boston, MA November 23rd, 2010 1 A Brief History of AVSG • AVSG was founded in 1992 and is based in Boston. It is one of only five or six companies in North America which can design, build, operate, and maintain CNG stations. • AVSG designed and built the Logan Int’l Airport CNG in October of 1995 and has maintained and operated the station under contract to Massport. • AVSG’s mission is the promotion and deployment of clean transportation throughout the six- state New England region – primarily utilizing CNG. • Since 1995, AVSG has built a network of twelve (12) full public-access CNG stations in eastern MA and northern RI as well as nearly fifty (50) private-access CNG stations throughout New England. • AVSG has been working with the Mayor, her staff, and department leaders since April of 2010. There have been multiple meetings, site visits, and presentations during this time. • AVSG looks forward to working with the City of Nashua as we move forward in the approval process for a full public-access CNG station. 2 A Brief History of AVSG • AVSG was founded in 1992 and is based in Boston. It is one of only five or six companies in North America which can design, build, operate, and maintain CNG stations. • AVSG designed and built the Logan Int’l Airport CNG in October of 1995 and has maintained and operated the station under contract to Massport. • AVSG’s mission is the promotion and deployment of clean transportation throughout the six- state New England region – primarily utilizing CNG. • Since 1995, AVSG has built a network of twelve (12) full public-access CNG stations in eastern MA and northern RI as well as nearly fifty (50) private-access CNG stations throughout New England. • AVSG has been working with the Mayor, her staff, and department leaders since April of 2010. There have been multiple meetings, site visits, and presentations during this time. • AVSG looks forward to working with the City of Nashua as we move forward in the approval process for a full public-access CNG station. 3 CNG is one of the six (6) federally-recognized alternative fuels: • Bio-diesel (B-20) • Electricity (EVs) • Ethanol (E-85) • Hydrogen (compressed - CHG and liquefied - LHG) • Liquefied petroleum gas (LPG) - commonly known as propane or bottled gas • Natural gas (compressed - CNG and liquefied - LNG) 4 Compressed Natural Gas (CNG) Vehicle Facts • Compressed natural gas or CNG is the compressed form of natural gas. It is the same fuel consumers and businesses use for heating, hot water, drying, and cooking. CNG is compressed so a large volume may be stored in a relatively compact space - such as on board a vehicle. • Natural gas is primarily a domestic product. Over 95% of the natural gas supplies originate in North America. Natural gas is transported via the underground pipe infrastructure (the safest way to transport energy according to the US DOE). • Natural gas is very abundant in North American. Huge reserves of gas have been located in NY and PA. In the US, 27 states now have the capability to produce natural gas. • Natural gas is lighter-than-air, non-toxic to breathe or touch, and cannot contaminate soil or groundwater. • The primary by-product of the combustion of natural gas is water vapor. • Every major North American vehicle manufacturer offers CNG models. • The dispensed price of CNG remains relatively constant – over many months – it is a very stable fuel in terms of cost. 5 6 Compressed Natural Gas (CNG) Vehicle Facts (continued) • On average, CNG vehicles emit (regulated emissions): 95% percent less particulate matter (PM), also known as soot, 90% percent less carbon monoxide (CO), and 75% less nitrogen oxide (NOx). • On average, CNG vehicles emit (non-regulated emissions): 20% less carbon dioxide (CO2) compared to diesel vehicles and 30% less CO2 compared to gasoline vehicles. • CNG vehicles are typically 50% quieter than their diesel counterparts (spark-ignited vs. compression-ignited). • CNG is the most prevalent alternative fuel in use today in New England. • CNG is the fastest growing automotive fuel in the world. 7 Compressed Natural Gas (CNG) Station Facts • CNG stations require no fuel deliveries. Natural gas is delivered to the station directly from the existing underground pipe infrastructure. • CNG storage is above ground. A typical station stores an amount of fuel approximately equal to 300 gallons of diesel fuel. • If there were to be a leak (which is unusual), the CNG would dissipate into the atmosphere. • Site selection included: finding high natural gas pressure as possible, 460 VAC - 3 phase electric power supply, and proximity to City of Nashua fleet facilities 8 Compressed Natural Gas (CNG) Station and Vehicle Economics Station economics: • The cost of the permitting, design, installation, operation, and maintenance of the CNG station will be borne by AVSG. • The City of Nashua will provide the land, site improvements, and the initial demand for the station. • The City of Nashua will work jointly with AVSG to reach out to non-City fleets to promote CNG (UPS, National Grid, Verizon, et al). • The station will accept MasterCard, VISA, Wright Express, and PHH credit and fleet cards for payment. • AVSG will also offer fleets an AVSG proprietary fuel card – good only for CNG purchases at AVSG’s network of CNG stations. 9 Compressed Natural Gas (CNG) Station and Vehicle Economics Vehicle economics: • The City of Nashua currently pays $2.65 per gallon – CNG will be priced at $2.30 per gallon. • For nine (9) CNG trash trucks – this amounts to a savings of $15,000 in fuel and $5,000 in maintenance costs per year. • As more fleets utilize CNG, the dispensed price will continue to decline. • The City will receive a percentage of the fuel sales at the CNG station. • The following cities and towns on Long Island have made the transition to CNG for solid waste and recycling collection – based on economics: Smithtown, Brookhaven, Oyster Bay, Islip, Huntington, and Hempstead. • The CNG option cost for the first nine CNG trash trucks is being offset by a grant from the US EPA - called DERA (Diesel Emission Reduction Act) funding – administered by NH DES. • Future CNG vehicle option costs may be offset by the fuel savings (mentioned above) in combination with the following funding sources: 10 Purchasing CNG vehicles: Federal incentives: • Existing federal tax credits (may be renewed as part of the tax cut extenders bill) • US EPA (additional DERA funding) • US DOE (Clean Cities funding) • NAT GAS Act (pending approval) • Sen. Harry Reid’s bill (pending approval) 11 On-road applications: • Transportation - transit buses (RTAs), transportation management associations (TMAs), airport and hotel shuttles • Delivery - beverage, linen, dry goods, and package • Waste - trash removal and recycling • Utilities – customer service vans, distribution trucks, pool sedans, dry freight Off-road applications: • Forktrucks - material handling • Ice resurfacers - skating rinks 12 Deploying CNG vehicles • OEM – Original Equipment Manufacturer (direct from the factory): For trash trucks, there is: AutoCar, Freightliner, Crane Carrier, McNeilus, Peterbuilt, and Mack products - all available with the Cummins-Westport 9.0L ISL – G CNG engine. The Cummins-Westport 9.0L ISL – G engine is the cleanest and quietest heavy-duty engine in the world today. The ISL – G : • Offers a maintenance-free exhaust system (new diesel engines require maintenance of the exhaust system). • Reduces noise emissions by approximately 50% (compared to diesel engines). • Carries a two-year – 250,000 mile warranty 13 Other New Hampshire CNG projects • Concord – AVSG has been awarded a contract to upgrade the existing state-owned CNG station at Stickney Avenue with a second compressor and credit/fleet card capability. • Durham – AVSG has been awarded a contract to upgrade the existing state-owned (UNH) CNG station with a larger compressor and credit/fleet card capability. Wildcat Transit operates twelve (12) E-450 CNG shuttle buses. Earlier this month, Wildcat Transit took receipt of three (3) 35’ long CNG transit buses A related project in Burlington, VT • Casella Waste Systems (CWS) broke ground in Williston (just outside South Burlington, VT) on its first CNG station last month. AVSG has delivered all the station components. This will be a time-fill system with CNG trash trucks refueling over-night 14 15 16 If you have any questions, please consider AVSG as your “one stop shop” for any/all questions or concerns regarding the CNG industry as a whole or AVSG’s capabilities in particular. Mike Manning Director of Marketing and Business Development AVSG LP C-6 Shipway Place Boston, MA 02129 TEL: (617) 242-8755, ext 14 FAX: (617) 242-0814 EMAIL: mm@avsglp.com 17