Proposed Hybrid Powered Solid Waste VehicleTHE CITY OF ~ Dubuque
--...
_~
DLTB E "°.~';~~~
„~~~
Masterpiece on tl~e Mississippi ;
2007
TO: The Honorable Mayor and City Council Members
FROM: Michael C. Van Milligen, City Manager
SUBJECT: Proposed FY09 Purchase of Hybrid-Powered Solid Waste Collection
Vehicle
DATE: March 13, 2008
Attached is additional information requested by the City Council during the budget
process.
,,.~L
Michael C. Van Milligen
MCVM/jh
Attachment
cc: Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
Jenny Larson, Budget Director
Don Vogt, Public Works Director
TO: Michael C. Van Milligen, City Manager
FROM: Don Vogt, Public Works Director
SUB.IECT: Proposed FY09 Purchase of Hybrid-Powered Solid Waste
Collection Vehicle
DATE: March 13, 2008
INTRODUCTION
The purpose of this memorandum is to provide information regarding the proposed
FY09 purchase of ahybrid-powered solid waste collection vehicle.
BACKGROUND
At the Public Works Department's February 23rd budget hearing, the question was
raised as to whether the additional cost of the hybrid-powered truck could be recovered
through fuel savings over the life of the vehicle.
DISCUSSION
When attempting to do a life cycle cost comparison of a standard vehicle with ahybrid-
powered vehicle, there are a number of variables that are relatively difficult to find
numbers for. What will the price of diesel fuel be ten years from now - or five years
from now - or even a year from now? What will ahybrid-powered vehicle be worth ten
years from now when traded-in or sold? For that matter, what will a ten year old, fuel-
hungryconventional truck be worth ten years from now? What will be the amount of
lost interest that the $60,000 could have earned over the next ten years?
There is no doubt that our proposed purchase would be breaking new ground. But
there are some suppositions that we can highlight regarding ahybrid-powered solid
waste collection vehicle, based on what the industry has already learned about other
hybrid-powered vehicles. Hybrid-powered vehicles use substantially less fuel, emit
fewer exhaust emissions, have longer engine life due to reduced idling and stress, and
are quieter. Based on information received from the three heavy truck manufacturers
who plan to have hybrid-powered truck chassis available for our solid waste collection
operations by calendar 2009, we have been able to complete the attached spread
sheet. The first estimated ten year average fuel cost of $4.05 per gallon is likely far too
conservative. However, using a projected ten year average cost of $6 per gallon for
fuel, ahybrid-powered recycling collection vehicle would more than pay for its initial
higher purchase cost through fuel savings. While some may question whether the cost
of diesel fuel will reach $6 per gallon in five years time, what we have witnessed over
the last three years does not engender optimism. As far as the lost income that would
have been earned by the $60,000 price differential over ten. years, 5% interest earnings
compounded annually would equal $37,750. At an average fuel cost of $6 per gallon, a
hybrid-powered recycling collection vehicle would not only pay for its higher purchase
cost with its fuel savings, but the fuel savings would also offset 20% of the lost interest
income. In any case, it should be expected that a portion of the lost interest income
would also be recovered through the hybrid-powered vehicle's higher trade-in or resale
value.
ACTION STEP
This is for your information.
Attachment
. .
HYBRID SOLID WASTE COLLECTION VEHICLE
TRUCK TYPE: REFUSE COLLECTION RECYCLING
TRUCKS IN EACH FLEET 6 6
REPLACEMENT SCHEDULE (YEARS) 10 10
ADDITIONAL COST FOR HYBRID $60,000 $60,000
PER YEAR $6,000 $6,000
OTHER HYBRID-RELATED ANNUAL
COSTS/SAVINGS:
MAINTENANCE -1,000 -1,000
MECHANICS' TRAINING 200 200
BATTERY REPLACEMENT 300 300
LOST INTEREST INCOME* 3,773 3,773
TOTAL ADDITIONAL ANNUAL COST $9,273 $9,273
ESTIMATED ANNUAL FUEL SAVINGS'" AT:
$4.05 PER GALLON -3,771 -4,577
$5.00 PER GALLON -4,655 -5,650
$6.00 PER GALLON -5,585 -6,780
AVERAGE ANNUAL GALLONS USED 3,945 3,324
(DAILY GALLONS USED) 15 13
* 5% INTEREST COMPOUNDED ANNUALLY
''' ESTIMATED 10% SAVINGS FOR HAUL MILES AND 50% SAVINGS FOR COLLECTION MILES
HAUL/COLLECTION MILES RATIOS: 66/34 40/60