NGV Market Growth and Potential LDC Roles

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1 NGV Market Growth and Potential LDC Roles Understanding NGV Market Drivers, Their Implications for Station Development and the LDC Role Stephe Yborra, Director Clean Vehicle Education Foundation / NGVAmerica Southeast Association of Regulatory Utility Commissioners Annual Meeting Asheville, NC June 11, 2013

Director Clean Vehicle Education Foundation / NGVAmerica Southeast

2 Snapshot of US NGV Market Today Existing NGV inventory is estimated at ~ K ~27-29,000 HDVs, ~18-22,000 MDVs, ~74-76,000 LDVs Vehicular natural gas consumption:~10-12% AGR past 6 years In 2005, ~200 million GGE; In 2011: ~350 million GGE In 2012: ~385 million GGE (~48 Bcf) Future:???? Station count is (~1250) has grown steadily in past months and installed capacity (SCFM / Hp) is up significantly Increased interest in LNG and L/CNG New players / new business models

million GGE In 2012: ~385 million GGE (~48 Bcf) Future:?

3 Natural Gas is an Abundant Domestic Fuel PGC Resource Assessments, % of US gas consumption is supplied from North America (~88% from US) Well-developed distribution infrastructure; ~300K miles of interstate pipeline 1.2 million miles of LDC distribution lines Technology improvements are expanding our economically recoverable base so much so that the estimated supply is 115+ yrs! Natural gas E&P activity is generating tens of thousands of quality jobs which gives direct and indirect economic boost to communities across America Shale Basins and the U.S. Pipeline Grid Source: American Clean Skies Foundation.

2 million miles of LDC distribution lines Technology improvements are expanding our economically recoverable base so much so that the estimated supply is now

4 Abundance Translates into Savings One MMBtu is ~8.0 GGE of (uncompressed) natural gas One MMBtu is ~7.2 DGE of (uncompressed) natural gas. If average MMBtu is ~$5.60 at city gate; commodity % is $.70/GGE ($.78/DGE). Add gas co. delivery, compression, maintenance, equipment amortization: ~$ /GGE. + applicable excise taxes

2 DGE of (uncompressed) natural gas. If average MMBtu is ~$5.

5 Growing Selection of NGVs from OEMs, SVMs OEMs American Honda General Motors Chrysler Ram Trucks Thomas Built Bus Blue Bird Bus Optima/NABI El Dorado New Flyer Motor Coach Industries Gillig Elgin Allianz/Johnston Schwarze Tymco OEMs Freightliner Truck Volvo International/Navistar Kenworth Peterbilt Mack ALF Condor Crane Carrier Autocar Truck Capacity Ottawa Freightliner Custom Chassis* Isuzu Truck North America* HD OEM/Repower Engines Cummins Westport Westport Innovations SVMs (LDV/MDV/HDV) Altech-Eco BAF Technologies Landi Renzo USA / Baytech IMPCO Technologies Westport LD NGV Motori USA NatGasCar Auto Gas America Go Natural CNG Greenkraft PowerFuel Conversions EcoDual American Power Group Peake Energy Solutions Clean Air Power Retrofits of GM, Ford, Dodge, VW, Mitsubishi, Mazda, Workhorse, Isuzu, JAC, UtiliMaster, FCCC

Truck North America* HD OEM/Repower Engines Cummins Westport Westport Innovations SVMs (LDV/MDV/HDV) Altech-Eco BAF Technologies Landi Renzo USA / Baytech IMPCO Technologies Westport LD NGV Motori

6 LDVs Available from OEMs

7 LD Vehicles Available Through SVMs

8 Buses, Shuttles, Work Trucks and Regional Haulers via SVMs. OEMs

9 Key Attributes and Best Prospects High fuel use vehicles with return-to-base operations or repetitive route or pre-set geographic operating areas Regional freight truck 16-20K GGE Transit buses K GGE Refuse /Concrete Trucks K GGE Municipal sweeper 5-6K GGE Airport shuttle service K GGE Taxi K GGE F&B, Textile Svcs, Household Goods 4-6K GGE School Bus 2-3K GGE Courier sedan, newspaper van, utility/ telecom van, public works pick-ups K GGE Consumers have already shown that they will adopt given sufficient infrastructure

5-10K GGE Municipal sweeper 5-6K GGE Airport shuttle service 5.5-7.5K GGE Taxi - 4.5-5.

10 Multiple Stakeholders Are Engaging NGV Fueling Infrastructure NG Exploration & Production Cos. Leasing Companies Customers Independent NG Retailers Traditional Fuel Retailers Truck stops: Pilot/Flying J, Love s, Shell-T / A C-stores: Kwik Trip, On Cue, and dozens of others looking Local Gas Dist. Companies

Leasing Companies Customers Independent NG Retailers Traditional Fuel

11 Q: How Do We Solve The Chicken-Egg Conundrum? A: Make a Chicken-Egg Omelet * Throughput volume is key to generating economies of scale for the station owner, thus allowing pump price differentials that drive reasonable payback and life-cycle savings for customers Minimum load thresholds vary based on a variety of factors including: Fast-fill vs time-fill, station size, fuel price differential, ability to amortize maintenance costs, equipment depreciation, grants, ROI expectations Fast-Fill: 20,000 GGE/month minimum (30-35,000/month is more desirable) Time-Fill: 6,500-8,000 GGE/month provides reasonable amortization of costs Achieve minimum load thresholds by: Anchor fleet that justifies the investment; aggregation of several semi-anchor fleets loads if their depots or operating areas are geographically acceptable; additional consumer retail sales *(Erik Neandross, GN&A)

savings for customers Minimum load thresholds vary based on a variety of factors including: Fast-fill vs time-fill, station size, fuel price differential, ability to amortize maintenance costs,

12 Historical natural gas contribution to CNG cost 80% 70% 60% 50% 40% 30% 20% 10% 0% $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 Historical crude contribution to diesel cost 80% 70% 60% 50% 40% 30% 20% 10% 0% $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 Comparison of raw commodity contributions to pump prices $5.00 $4.00 $4.00 2% $ % $2.00 $1.00 $ % $4.00 Diesel ($86 WTI) $ % 60% 18% $2.00 Natural Gas $ % 52% 28% $3.50 Natural Gas $ % 39% 42% $7.00 Natural Gas Retail Markup Refining/Compression, Distribution, Taxes Raw Commodity

00 Comparison of raw commodity contributions to pump prices $5.00 $4.00 $4.00 2% $3.00 40% $2.00 $1.00 $0.00 58% $4.00 Diesel ($86 WTI) $1.

13 Components of CNG Cost Gas Bill: $.95/GGE (could be lower /higher in different markets) Unregulated gas acquisition cost (assume $5.60/MMBtu = $.70/GGE) Regulated tariff (LDC service from city gate to customer s meter): $.25/GGE Compression - Rule of thumb: One fully-loaded kwh/gge ($.10-15/GGE) Station Maintenance - Normal PM, repair/replace parts, rebuild ($ /GGE) CAPEX/Equipment amortization ($ ) Cost of equipment or cost of capital factored into each GGE over life of station CNG: $ /GGE before taxes Add applicable motor fuels excise tax (if applicable) Federal excise tax = $.183/GGE; states vary widely

10-15/GGE) Station Maintenance - Normal PM, repair/replace parts, rebuild ($.25-.45/GGE) CAPEX/Equipment amortization ($.40 -.

14 Refuse Truck (LCF model) Crane Carrier LET, Autocar Xpeditor, Peterbilt LCF 320, Condor, Mack TerraPro MPG: (lots of idle and PTO time) Fuel Use: 35-40gge/day; ,000dge/yr CNG/LNG Premium: $32,000 Grant $16,000 Remaining Premium: $16K Simple Payback: years (based on 1.70 savings /DGE ) Life-cycle cost savings: $99 - $120K+ (based on 8-year life) If no grant, payback is years.

0 (lots of idle and PTO time) Fuel Use: 35-40gge/day; 8500-10,000dge/yr CNG/LNG Premium: $32,000 Grant

15 Medical Lab Courier Service Honda Civic Natural Gas sedan MPG: 19/30 City/Hwy, 30K miles/year Fuel Use: 4-6 GGE/day; GGE/yr CNG Premium: $6500 Grant: $4000 Remaining premium: $2500 Simple Payback: yrs (based on $1.50/GGE savings at retail station) Life-cycle cost advantage: $5000 $9330 (based on 5yr life) Without grant, simple payback = yrs

premium: $2500 Simple Payback: 1.05 1.65 yrs (based on $1.

16 LDC Role in Facilitating NGV Market Development and Related Ratepayer Benefits Educating fleets/consumers, policymakers, AHJs and regulators Facilitating station development through favorable operating practices such as investments in elevated pressure delivery Facilitating information exchange between potential customers and vehicle and station supply chain channels Establishing favorable NGV rate structures Implementing NGV program in their own fleet Investing in station development projects either directly or through partnerships with third party providers

information exchange between potential customers and vehicle and station supply chain channels Establishing favorable NGV rate structures

17 LDC Role in Facilitating NGV Market Development and Related Ratepayer Benefits Investing in station development projects either directly or through partnerships with third party providers Q: How do you keep level playing field and encourage private investment in station development? A1: Fully allocate all station costs to pump price, i.e. don t rate-base A2: Allow utility to serve as incubator, to invest in and partially ratebase stations that might not initially meet private industry s critical thresholds; Assess escrow fund fee/gge to bring parity with market pricing; use fund to accelerate additional vehicle investments to ramp up volume across all stations. Measure could be temporary, reviewed by PUC as vehicle count and related infrastructure develop, perhaps with sunset clause requiring sale to private retail fuel providers when critical market penetration level is achieved

p level playing field and encourage private investment in station development? A1: Fully allocate all station costs to pump price, i.e. don t rate-base A2: Allow utility to serve as incubator, to

18 Questions? Discussion

19 For more information please contact: NGVAmerica Clean Vehicle Education Foundation Doug Horne, P.E. President / (770) Stephe Yborra Director / (301)

E. President dbhorne@cleanvehicle.org / dbhorne1@comcast.

Dollars and Sense. NGV Economics: Components of CNG Cost, Calculating Simple Payback and Life-Cycle Cost Savings

Dollars and Sense. NGV Economics: Components of CNG Cost, Calculating Simple Payback and Life-Cycle Cost Savings Dollars and Sense NGV Economics: Components of CNG Cost, Calculating Simple Payback and Life-Cycle Cost Savings Components of CNG Cost Gas Bill: Gas Commodity Pipeline transportation to utility s city