Quid Pro Quo…Happens All the Time

(LFC Comments” Definition of quid pro quo: “a favor or advantage granted or expected in return for something”.  We are having difficulty differentiating the difference between the expression “strings attached”, and a “quid pro quo”.  They both mean, if I give you something, I expect you to act in a certain way.  The Federal and State government engineers how an entity is supposed to act by virtue of giving them grant money.

We contacted Mr. Ben Capelle, Executive Director at LakeTran to see what strings are attached to the government grants received by LakeTran?  You might find the following strings of emails interesting.  Many thanks to Mr. Capelle for his timely, and straight forward responses.)
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Mr.. Capelle:

We were wondering if the government grants that LakeTran received came with any “strings attached”? Is LakeTran required to purchase certain types of vehicles, or change anything about their operations to satisfy the governmental requirements before they provide the grant money?

Hey Brian,

The short answer is yes, all of our grant funds come with what I would call a “spider web” of strings; however we have been operating within those requirements for all of our existence.  Our main grant from the Federal Transit Administration (FTA) is a formula and is where most of the strings emanate from, over time the FTA does make changes, and we adapt to them, so the way we operate Laketran is always in compliance with those grants.  In total, Laketran is very heavily regulated by the FTA, virtually all aspects of our operation have some type of regulation associated with them.

The only area we consider making changes is when we apply for grants for buses, they can come from different categories which can have special rules, which we evaluate before we apply.  So in this case, we may have to change how we do things, but we make that choice on the front end rather than after we get the funds.

For example, we applied for funds through the Ohio EPA for the Diesel Emissions Reduction Grant.  Normally when we buy a new bus we are required to auction the old one, which brings in a small amount of revenue.  With that grant we were required to punch a hole in the engine block and then crush the bus, so we had to spend a small amount of money to dispose of the bus, vs. make some money.  In the end it was still very beneficial to apply for the grant because of how expensive a new bus is.

I know this is a short answer, but this is a topic I could talk about for days.  If you have any more questions want to chat in person or on the phone I would be happy to explain more.  Thanks!

Ben,
Thank you for responding so quickly.
Were you required to purchases buses that operate on natural gas?
We heard one of the new buses caught on fire.  Is that true, and do we know what caused the fire?
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Brian,

The buses we bought are for Dial-a-Ride and they run on propane.  We were not required to buy them, we made the choice after a long evaluation  process in 2015.  I have attached the slide show we gave to the Board about how we made the choice.  Our initial estimates we intentionally conservative and the propane buses have outperformed our expectations significantly.  Our last load of propane cost us $.65/gallon, putting our cost savings closer to 40% over diesel.

Buses began arriving 2017 and one of the first ones we bought did catch fire.  I cannot say specifically what caused the fire because the issue is still in court with our insurance folks so I cannot discuss it right now.

I can say that we changed vendors for the propane conversion systems and we have had over 20 propane buses on the road for a while now with no issues.  If you have any other questions let me know, thanks!

Ben Capelle

LakeTran’s presentation on decision to purchase buses powered by propane:

 

Future of Laketran Dial-a-Ride Bus Fuel 

Dial-a-Ride Bus Chassis History 

  • Ford stopped production of diesel engines in bus chassis in 2010. 
  • Laketran has heard industry rumors that Chevrolet will be discontinuing diesels in bus chassis. 
  • In early 2015 Laketran staff began exploring options should diesel engines be eliminated by Chevrolet. 
  • Laketran will receive 12 buses in 2016 which include diesel engines, but this will likely be the last production run for diesel engines. 

Initial Information Gathering 

  • May 2015 staff attended a propane lunch and learn sponsored by Clean Fuels Ohio 
  • June 2015 staff visited several bus manufacturers to discuss the future of fuel choices for Dial-a-Ride sized vehicles. 
  • July 2015 staff met with a representative from Clean Energy, who is a provider of compressed natural gas fueling stations. 
  • August 2015 staff went to Provide-A-Ride in Cleveland to view their fleet of propane powered buses. 

Options 

After gathering information staff felt it was appropriate to evaluate the 4 fuels that could possibly fuel Dial-a-Ride buses. Those fuels are: 

  • Propane (AutoGas) 
  • Gasoline 
  • Diesel 
  • Compressed Natural Gas 

Staff quickly eliminated compressed natural gas due to cost and diesel due to limited vehicle availability. 

Evaluation

Staff set out to evaluate what the best fuel would be for Laketran, comparing propane and gasoline. 

  • Both gasoline and propane have lower BTU’s than diesel, which means Laketran will see a drop in MPG. 
  • Laketran has 8 buses than run on gasoline, which get an average of 7.8 MPG. 
  • Propane has historically been much cheaper than gasoline, but typically results in a 10% drop in fuel economy compared to gasoline. 

Both would require the installation of a new fuel storage and distribution system.

Additional Cost Savings 

In addition to saving 35% in fuel expenses propane buses reduce Laketran’s expenditures in the following additional ways: 

  • A propane bus costs $6,000.00 less to purchase than diesel buses. 
  • Laketran currently spends $3,900.00 on diesel exhaust fluid each year, which is not required for propane. 
  • Propane engines are easier to maintain than diesel engines. 

Operational Cost Comparison

• Estimated cost using actual fuel prices from September 2015.
• Assumes vehicle traveled 300 miles.
• Propane MPG calculated at 70% the MPG of gasoline, which is
inline with the drop in BTU.
• Propane fueled buses result in a 35% savings in fuel cost.

Miles Per Gallon/ Price Per Gallon/ Gallons per day/vehicle Cost per day
Gas 7.825 / $ 1.98 / 38.34 / $ 75.91
Diesel 11.383 / $ 2.44 / 26.36 / $ 64.31
Propane Estimate: 5.478 m.p.g / $.76 per gallon /  54.77 gallons per day / $41.62 Total Cost per Day.  (emphasis by LFC)


 

 



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