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PROPOSAL:
Amend Contract for Incentive Buy-Down Program for CNG Home Refueling Appliance
SYNOPSIS:
On May 6, 2005, the Board approved matching funds with the MSRC and provided $400,000 for a buy-down incentive program for 400 natural gas home refueling appliances (HRAs) to broaden the consumer base for light-duty NGVs. Funding for the 400 HRAs was allocated in two contracts: 100 purchases through FuelMaker Corp. and 300 leases through American Honda. In February 2007, the Board de-obligated $250,000 from the lease program and apportioned this amount to the purchase program and commenced an AQMD-only sponsored purchase incentive of $2,000 per HRA. Overwhelming response to the buy-down incentive program continues for the purchase of an HRA prompting this action to amend the FuelMaker contract to add $146,000 from the Clean Fuels Fund.
COMMITTEE:
Technology, June 20, 2008. Less than a quorum was present for the discussion of this item; the committee members recommended that this item be forwarded for Board consideration with concurrence from the Committee members present.
RECOMMENDED ACTIONS:
Authorize the Chairman to amend Contract No. 06018 with FuelMaker Corporation to:
- Increase the value of the contract by $146,000 from the Clean Fuels Fund;
- Continue AQMD-only sponsorship of the buy-down incentive program for purchasing a home refueling appliance (HRA) at $2,000 incentive per HRA;
- Extend the performance period for the contract by twelve months, to December 31, 2009.
Barry R. Wallerstein, D.Env.
Executive Officer
Background
On May 6, 2005, the Board approved cosponsoring and cost sharing with MSRC a buy-down incentive program for a CNG home refueling appliance and executing contracts with FuelMaker Corporation and American Honda Motor Company, Inc. (AHMC) for the purchase and lease, respectively, of a home refueling appliance. The objective of the buy-down incentive program is to reduce air pollution in the Basin by encouraging the expansion and use of alternative fuel vehicles by the general consumer.
The buy-down incentive program began with two sole-source contracts: one with AHMC at a cost not to exceed $300,000 toward the lease of 300 home refueling appliances; the other with FuelMaker Corporation at a cost not to exceed $100,000 for the purchase of 100 home refueling appliances. Both contracts provided $1,000 incentive per home refueling appliance, with total funding for the program at $400,000 from the Clean Fuels Fund. The MSRC agreed to cosponsor the program and developed identical contracts and terms. Together the MSRC and AQMD buy-down incentives provided consumers with a $2,000 cost saving per home refueling appliance.
Response to the buy-down incentive program for purchasing a home refueling appliance through FuelMaker Corporation was overwhelming. Subsequently, in February 2007, the Board reduced the value of the AHMC contract by $250,000 and applied this amount to the FuelMaker contract. In addition, the AQMD became the sole sponsor for the purchase of an HRA and increased the incentive for purchase to $2,000 to maintain the effective buy-down to the consumer.
The lease program with AHMC ended in April 2008 with a remaining balance of $46,000. (The funds reverted back to the Clean Fuels Fund.) However, the contract with Fuelmaker Corporation is ongoing until the end of 2008.
Proposal
Given the success of the buy-down program with FuelMaker Corporation, staff is recommending that the Board augment the contract with FuelMaker Corporation with an additional $146,000 for the buy-down incentive program for the compressed natural gas (CNG) home refueling appliance, known as Phill. In addition, staff is recommending that the performance period be extended to December 31, 2009.
Benefits to AQMD
Gasoline and diesel fueled mobile sources are a significant source of emissions in the AQMD and alternative fueled vehicles are a means of reducing these emissions. This project will incentivize consumer interest in alternative fueled vehicles and continue the momentum and expansion of natural gas home refueling appliances and passenger car alternative fuel vehicles.
Sole Source Justification
Section VIII.B.2 of the Procurement Policy and Procedure identifies four major provisions under which a sole source award may be justified. This request for a sole source award is made under provision d (2) Time extension of an existing contract.
Resource Impacts
Sufficient funds are available in the Clean Fuels Fund for the additional $146,000 recommended for the buy-down of the CNG home refueling appliance. The Clean Fuels Fund is a special revenue fund established from the state-mandated Clean Fuels Program. The Clean Fuels Program, under Health and Safety Code Sections 40448.5 and 40512 and Vehicle Code Section 9250.11, establishes mechanisms to collect revenues from mobile sources to support projects to increase the utilization of clean fuels, including the development of the necessary advanced enabling technologies. Funds collected from motor vehicles are restricted, by statute, to be used for projects and program activities related to mobile sources that support the objectives of the Clean Fuels Clean Fuels Program.
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