Analysis of the analysis

It was September 2013 when the Fort Smith Board of Directors encouraged city staff to do more to incorporate compressed natural gas (CNG) vehicles into the city fleet. At the time, City Administrator Ray Gosack said he would make sure a focus on CNG vehicle purchases was a part of the city's fleet replacement plans. Board members were pleased with Gosack’s effort to focus.

"I think this is the wave of the future and to me, it's about clean energy," Director Pam Weber said then. "Ultimately, this is an economic development tool, not only for our country but for our region because we are sitting on a very large natural gas deposit here in the Arkoma Basin."

Before I move further into this essay, Kind Reader should know I am an advocate for broader use in this country of fueling vehicles with compressed natural gas. It is not fantasy or hyperbole to believe that serious and strategic public-private partnerships to boost CNG use and access could within less than two decades secure American energy independence and create jobs. Lots of jobs. Lots of good-paying jobs. And unlike the “promise” of wind energy that required ongoing tax credits and public support – sometimes from utility ratepayers – to keep alive, the CNG industry would quickly be a self-sustaining market.

Let’s return now to Fort Smith and the “focus” on CNG use.

Several weeks prior to the Aug. 19 vote on a city fleet purchase, I asked Deputy City Administrator Jeff Dingman if he would send me the memos, notes and other correspondence relating to a city staff recommendation on the purchase of compressed natural gas vehicles.

I wanted to see the analysis. More and more private sector fleets are converting vehicles to CNG or purchasing CNG vehicles from dealers – from small mom-and-pop companies to corporate giants like UPS and AT&T. Demand for CNG is growing around the nation and in the area. A little more than three years ago there were no public CNG stations in Arkansas. There are now two in Fort Smith and by the end of 2014 there will be at least 11 in Arkansas. Just a few years ago there were a handful of public CNG stations in Oklahoma. Today there are 74 open to the public.

The city of Tulsa is in the process of building a second CNG station for its fleet of CNG vehicles. In a recent Tulsa World report, Mayor Dewey Bartlett said CNG saved the city’s transit system almost $400,000 in 2013. More than half of the city’s transit fleet is fueled with CNG.

In Columbus, Ohio, city officials plan to have 440 CNG vehicles by 2020. The city estimates cost savings from the CNG fleet at $1.9 million a year.

Tax collections in Texas from liquified natural gas and CNG topped $2.2 million in July, well ahead of the $992,000 projection based on previous year sales.

“Natural gas vehicles are becoming mainstream faster than expected. And there’s plenty of room for growth. These excellent sales figures represent only a fraction of potential sales,” Railroad Commissioner David Porter said in this article from the Dallas Morning News.

Clean Energy, the nation’s largest operator of CNG and LNG stations, opened 55 new CNG stations in 2013, and opened 27 in the first half of 2014. According to Clean Energy, 60% of all new garbage trucks purchased in North America in 2013 were fueled by CNG.

“Nationwide, our core market customers broke records, purchasing 77 percent more NGVs in 2013 than in 2012,” noted Clean Energy’s 2013 annual report. “We also helped school bus fleets such as Lee’s Summit in Missouri do the same so they could put the district’s dollars into the classroom rather than in the gas tank.”

I could go on.

In my pre-Aug. 19 Fort Smith Board meeting discussion with Dingman, he said the numbers were still being crunched and he did not yet have anything final he could share. I thanked him for his time and made a note to ask for the analysis after the board meeting. It was likely there would be fresh analysis because City Administrator Ray Gosack said this at the Aug. 19 Board meeting: "We do a cost benefit analysis for a rate of return on making the investment in CNG vehicles.”

And with that analysis, the city staff recommended only one CNG vehicle be purchased as part of an overall $1.075 million ticket for new vehicles.

Except there was no analysis of 2014 costs and potential future savings. When Gosack told the Board “We do a cost benefit analysis …” he was, well, ummmm, let’s see, sort of not telling the Board the whole story.

When The City Wire asked after the Board meeting for the CNG analysis, we were told no recent analysis was conducted, and instead were referred to a city document from 2012 that looked at CNG usage. Did the city base its 2014 CNG decision primarily on 2012 analysis? Surely not. Assuming some sort of miscommunication, I called Dingman. I wanted to see the analysis.

Dingman said the city “didn’t do specific analysis of payback on those vehicles.” When asked if anyone at the city conducted an indepth recent cost benefit analysis of acquiring and using CNG vehicles, Dingman said, “Not to my knowledge.”

Let’s add perspective. With millions of dollars in long-term fuel savings possible for the city through the use of CNG, no “specific analysis” was conducted. The city will spend $340,000 and 18 months on a comprehensive plan study, but city staff can’t be bothered to carefully consider something that produces cost savings for other cities.

It may be that the city’s fleet realities do not financially favor acquiring CNG vehicles. But unlike the Fort Smith Board of Directors, I find unacceptable a recommendation without a rigorous and recent cost-benefit review. I’d like to see the analysis. Please walk me through the spreadsheet that shows our CNG numbers run contrary to what is experienced in Columbus, Tulsa, Texas and other areas of the country.

They say natural gas is odorless, but this CNG recommendation by the city and approval by the Board has a certain fragrance.