City scales back natural gas transit switch

By Collin Gallant on October 25, 2018.

cgallant@medicinehatnews.com @CollinGallant

A plan to convert Medicine Hat’s entire transit system to run on compressed natural gas will be scaled back as a way to manage risk against breakdown of the region’s only CNG fuel station, city managers told the News on Wednesday.

The station, built and operated by the city on 10th Avenue SW specifically to power the bus fleet, is in full operation.

But a hope for the private sector to embrace the fuel and build subsequent stations hasn’t materialized, and that leaves no backup.

“The intent originally was to go 100 per cent CNG, but this is risk mitigation,” said Joe Cartwright, the city’s manager of corporate asset management.

“Right now we’re the only game in town for CNG, and we know if it goes down or has a long-term outage it would severely affect the core transit service to the city.

“With a small amount of diesel buses, augmented with special transit buses, we could still provide transit service.”

The new target is to maintain a ratio of two-thirds CNG and one-third diesel-powered models for full-sized buses.

That was revealed in August when the city put out a tender for suppliers to bid on an order of 11 new 35- to 40-foot buses, requiring six to be CNG powered and the other five, diesel.

That order, included in the 2017-2018 fleet budget, is coupled with seven new shorter, special transit models, which remain diesel.

Administrators also say the move has nothing to do with operational cost of natural gas, which like diesel, is subject to a provincial carbon levy not envisioned when the entire plan was approved in 2013.

“In terms of the (new purchases of) buses, it’s not a factor,” said Cartwright. “We’re continuing to watch the costs, CNG and the capital costs, and doing that analysis.”

City planners originally projected an annual fuel cost savings of about $500,000 per year converting high-mileage in-town vehicles, like large buses, garbage trucks and some heavy trucks, to the alternative fuel.

The cost difference for an individual vehicle was said to be $40,000 when the plan was approved in 2013, with replacements added over a 10-year period as vehicles were routinely replaced.

The total budget for the switchover was pegged at $6.5 million, including the fuel station and garage improvements.

The fleet budget for the 2019-23 period, approved Oct. 15 with a council vote, shows transit-related spending on replacements is set to plunge.

Only $80,000 is required during that time, and the 10-year timeline estimates $5.2 million in transit-specific money would be needed.

That comes after several years of higher than initially thought project spending to convert the bus fleet, which was offset largely in the case of transit by provincial grants.

Coun. Phil Turnbull noted last week that after a 2012 audit of the department, the number of vehicles and pieces of equipment in the city’s ownership dropped from more than 1,000, to fewer than 700.

“We’ve done a very good job managing the fleet,” he told council.

Approved fleet spending is set at $7.24 million in 2019, most of which is coming from a fleet reserve that charges specific department budgets the yearly depreciation on existing vehicles, thereby ensuring money for replacement vehicles is available.

The exception in the coming plan is $680,000 that will be borrowed to add new vehicles related to berm maintenance and airport operations.

The total annual purchase program drops to $5.34 million in 2020, then $3.9 million and $4.4 million in the final two years.

“We’re trying to find a balance where we’re not buying a lot of new vehicles in any given year,” said Cartwright.

“Most of the new (purchases) planned now are just replacement of like for like vehicle (replacements).”

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