Efficient Fuel Procurement for Government Entities

1. Nationwide Aggregated Purchase of Motor Fuel for State and Local Governments …true Aggregation – your added volume makes a difference! July, 2010 www.depo.org

2. Leverage your Buying Power: • State and Local governments have enormous buying power • And now, DEPO’s Aggregated Buying Platform enables you toleverage that buying power • Use the same refined, sophisticated and precision tools as the private sector • Ease of use - No new software or learning curve to join a pooled purchase • No “Buying Coop” to join; no membership dues; no buyer participation fees • True aggregated purchasing means your additional volume should improve the pricing for all participants

3. Collaborative Buying Saves Money: • Collaborative buying • Typically difficult to organize, especially across borders • DEPO takes the work out of organizing aggregated or collaborative purchasing, makes it easy, straight-forward and rewarding • Your existing IFB and underlying documentation • Upload your detailed documents or easily build your IFB on the DEPO platform • Maintain your own specs/requirements • Your documents and specs govern your bids • You cede no discretion or control to DEPO or any other party • Easy to use, money saving and no cost to buyers • Ensures more suppliers, and improved, tighter bids from suppliers • Tighter bids mean fewer hedge factors built into their bids

4. Motor Fuel Purchasing: • Typically, motor fuel represents a major expenditure for SLGs • Major expenditures present significant savings opportunities • Most SLGs/transit agencies are in the middle of existing fuel contracts, but you can still save money by using the DEPO platform • Your existing contracts are normally notguaranteed-purchase contracts • If you participate in a motor fuel pool and receive better pricing, you can, typically, order off a new contract without penalty under your old contract • Your existing contract vendor will, most likely, bid on the new contract in order to have the opportunity to capture all or a portion of the larger fuel pool volume

5. Sealed Bid Approach: • Fully compliant with all known competitive bid laws, practices and procedures • Entire process modeled after familiar sealed bid approach • You do not contract with DEPO, hire us or pay us a fee • You do not cede any discretion to DEPO or any other party • You evaluate your own bids and accept or reject them as you have in the past • If you award a contract, that contract is solely between the supplier or suppliers you chose and your entity

6. You Decide: • Multi-year contracts and your required renewal options • Whether you want to continue receiving Bundled bids • Fuel purchase and delivery from same vendor • Traditional method of purchase • Or, whether you want to permit Unbundled bids • Permits vendors to bid on sale of fuel, delivery of fuel or combination of both • Attract more fuel suppliers (including, possibly, refiners), more fuel delivery companies (often MBE/WBE or locally-owned) • More vendors encourages more competition • More competition leads to improved pricing and greater savings • Could lead to more aggressive bidding since each party is enabled to address what it is best equipped to do

7. You can also specify: • Whether you want to continue purchasing fuel in the proven and accepted traditional unguaranteed purchase manner • Or whether you want to guarantee a portion of your requirements for • Improved pricing on this portion of your purchases • Improved hierarchy positioning in the event of fuel shortages and allocation due to weather, plant shut downs, etc. • We sometimes recommend placing 50%-70% of your last year’s volume in the Guaranteed Purchase Pool and 100% in the Unguaranteed Purchase Pool to compare bid pricing • Whether you require supplier local storage or some similar requirements

8. Comprehensive, yet Flexible: • Select your specific Fuels and Quantities • From among 460, including diesel, biodiesel, gasoline, natural gas, jet and aviation fuels • Your Contract terms • Start Date (may be several months in the future) • Renewal Option requirements • Include or exclude State and/or Federal taxes (and amounts) • Your Pricing mechanism • Choose index (OPIS, Platts, Argus) • Non-hedgeable indices if you do not plan to hedge • Hedgeable indices if you plan to hedge now or in the future • Your Delivery requirements • Storage tank locations • Number, size and type of tanks • Special instructions for trucking/delivery

9. Typical Index-based Pricing: • Fuel Pricing for periodic deliveries on bundled bid basis

10. Typical Index-based Pricing-cont’d: • Fuel Pricing for Unbundled bidding (allows each participant in supply chain to do what it is best qualified to do)

11. Is Hedging Desirable? • What does hedging do -- Hedging is a means of stabilizing prices to better permit operating against a budget • Hedging should not be viewed as a means of saving money – for savings, look to collaborative/aggregated buying • Is hedging speculating – most view hedging as a means for removing speculation for buyers. Some say playing everyday price volatility is speculation • Need help determining whether hedging is suitable for you and in formulating your hedging strategy – we can help • Bulk fuel buyer of 2.5 million gallons (or more) annually needed for hedging