Item 16 - Amend Agreements for Renewable Natural Gas Fueling Station

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Amend Agreements for CNG Station December 20, 2022 Page 2 3 1 3 0 2032, with provisions for annual renewals, subject to non-substantive changes approved by the City Manager and City Attorney. DISCUSSION The City’s Public Works Agency utilizes a variety of heavy equipment and trucks to deliver street maintenance, water, and sewer services. The City has recently completed its goal of transitioning all heavy equipment from diesel fuel to natural gas fuels and it is necessary to replace and upgrade the existing compressed natural gas (CNG) fuel station, located at the City’s Corporate Yard, which has surpassed its useful life, to allow for fast and efficient fueling with a publicly-accessible station. On August 17, 2021, at the conclusion of a competitive bidding process, City Council awarded three agreements to TruStar Energy, LLC. (TruStar), now known as OPAL Fuels Station Services, LLC. (OPAL), to: 1) construct a new compressed renewable natural gas (RNG) fueling station at the City’s Corporate Yard, 2) maintain the facility, and 3) supply RNG. RNG is an environmentally superior fuel alternative to standard CNG as it is produced by harvesting harmful greenhouse gasses from landfills and waste processing facilities and is classified as a low carbon fuel by the California Air Resources Board’s (CARB) Low Carbon Fuel Standard. The Low Carbon Fuel Standard creates a market for offsetting greenhouse gas credits for RNG dispensing facilities allowing for RNG dispensers to sell their credits and generate revenue. Originally, the scope of work was for a limited scale upgrade of the existing CNG station and did not include a publicly-accessible fuel station. The project was to be financed by OPAL in exchange for 100% of the RNG credits and the City’s guaranteeing a certain volume of RNG dispensed. Since that time, staff has re-evaluated the fueling needs, contract terms, and identified alternative funds to complete a broader reaching scope of work that would meet the City’s full fueling needs. As such, staff approached OPAL about amending the original agreements and requested that OPAL submit a proposal for a new turn-key, RNG fueling station which adds a publicly-accessible fuel station. Approval of the amended and restated Design-Build Agreement (Exhibit 1) will allow greater flexibility in design to better meet the needs of the City’s fleet, reduce long-term fuel costs to the City, and allow for a publicly accessible RNG fueling. The Environmental Attribute Agreement, which allowed for OPAL to claim 100% of the available California Air Resources Board (CARB) and United States Environmental Protection Agency (EPA) credits for dispensing RNG will also be restated as part of this action. Staff determined that this arrangement, which was intended to cover initial capital costs, presented too much risk and was not in the City’s best interest. Staff recommends approving the Master RNG Dispensing Agreement (Exhibit 2), which allows the City to