Natural Gas
3:07 pm
Wed December 11, 2013

Utilities Want to Offer Natural Gas Truck Refueling, Competitors Object

Natural gas is cheaper and burns cleaner than the gasoline or diesel that goes into most vehicles. Those are two reasons trucking fleet operators in the Northwest are showing growing interest in filling up with natural gas instead of diesel.

The problem is there are very few filling stations for natural gas. Now several big utilities in this region are asking to get into this line of business. But the proposed expansion comes with some controversy.

I Feel Like I’m Helping in Some Way’

Delivery truck driver Corey Schaller has one last stop before he can call it a day. He has to refill the gas tank of the beer truck he drives for Kent, Washington-based Click Wholesale Distributing. But there are just a few places he can go. That's because this otherwise normal-looking Ford box truck has been converted to run on compressed natural gas, or CNG.

Asked about the price at the pump—$2.14 per gallon, Schaller said, "Oh, yeah. It's good!"

Schaller says he's glad he no longer spews diesel exhaust on his rounds delivering beer, wine and spirits.

"I feel like I'm helping in some way, at least the person driving behind me,” Schaller said.

Schaller's bosses say cleaner air and the lower fuel price are key reasons they aspire to convert the company's entire fleet. Engine maintenance cost savings are another plus. By early next year, Click Wholesale CEO Jim Florio hopes to have seven of his 20 trucks fueled by natural gas.

"Along the way, we've been told that you're going to be the guinea pigs for this. We felt that way a little bit. But our drivers have come back and said, 'I feel really good about driving this truck,'" Florio said.

Call for More Refueling Stations

Florio says the lack of refueling stations is a hurdle for wider adoption. Washington has seven public CNG stations, all in the central Puget Sound region. Oregon has just three public CNG filling stations; Idaho has two.

"We're all very limited. Especially if a station goes down in a core area and somebody is running low on fuel, you may not have enough fuel in the tank to get from where you're at to another station that is available,” he said.

Florio says there needs to be a stronger refueling infrastructure to get "to the next level." Enter the Northwest's biggest gas utilities.

"As we saw our customer interest grow, we said this is sort of a natural place for us to provide a service that would help our customers,” said Ben Farrow, Puget Sound Energy's manager of natural gas and electric development. He sees a potential market of "thousands" of vehicles, which could plausibly be converted to natural gas just in western Washington.

PSE and the Portland-based utility NW Natural have approached their respective regulators for permission to sell on-site fueling stations to fleet operators. Spokane-based Avista Utilities says it's interested in this, too, and may follow. 

‘Unfair Competition!’

: Clean Energy operates this CNG filling station near the airport in SeaTac, Wash.
Credit Tom Banse

But wait. Third-party installers of natural gas filling stations cry "unfair competition!"

"We feel to have utilities enter into the natural gas refueling infrastructure market creates an anti-competitive situation because of the advantages regulated utilities have as a result of their monopoly status,” said Warren Mitchell, chairman of a nationwide station builder and operator called Clean Energy Fuels.

Those “advantages” include captive customers, cheaper access to capital and the ability to cherry pick customers based on inside knowledge of usage, said Mitchell.

"This is going beyond the meter. It is a private business function. It is best implemented by private business," he said.

"Choices in that marketplace are a good thing," said Farrow in response. "We don't want to compete unfairly."

Looming Decision

In regulatory filings, NW Natural and Puget Sound Energy say they plan to run their vehicle fueling programs as discrete, self-sustaining operations. The PSE filing to its state utilities commission asserts, "Because customers served under this service will pay the full incremental costs associated with the provision of this service to their site, the addition of this optional service offering should have no negative cost impact on other ratepayers." 

Competing fueling station providers including Clean Energy subsequently lodged formal objections. A joint letter to Washington state regulators says that if the incumbent utility is allowed to expand, it "will discourage competitors from investing in the Washington natural gas vehicle refueling infrastructure market, undermining the development of the very market the (proposal) claims to promote." 

A decision from the Washington Utilities and Transportation Commission on PSE's request is expected next year.

Several private companies are building liquefied natural gas filling stations along Northwest interstates. The super-cooled natural gas from these pumps can fuel specially modified big rigs. This niche has not inspired the same competitive ire. Northwest gas utilities have limited their expansion plans to CNG and have not indicated interest in the LNG fueling infrastructure market. 

The high cost to build filling stations and to convert vehicles to run on natural gas has limited the customer base mostly to large fleet operators with predictable routes or return-to-base operations for now. Only one major automaker sells a factory-built CNG car, the Honda Civic Natural Gas. Its fuel tank takes up about half the space normally found in the trunk.

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