Presentation by: Paul Kerkhoven Director of Government Relations NGVAmerica

1. The Right Choice. The Right Time: The Compelling Case for Natural Gas Vehicles in Heavy-Duty Fleet Applications Presentation by: Paul Kerkhoven Director of Government Relations NGVAmerica

2. Overview • New federal incentives: The “3-legged stool” • Available natural gas vehicles and engines • Applications best suited for NGVs • Sample economics

3. Energy and Highway Bills Approved By Congress • HR 6: the Energy Policy Act of 2005 • Includes income tax credit for alt fuel vehicle purchases and fueling infrastructure • HR 3: ‘‘Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users’’ or ‘‘SAFETEA–LU’’ • Includes excise tax credit for natural gas and other alt fuel used

4. Bus Purchase Tax Incentive(Energy Bill) • A income tax credit to the buyer of a new, dedicated alternative fuel vehicle: • 50 percent of the incremental cost of the vehicle • plus an additional 30 percent if the vehicle meets certain tighter emission standards. • Tax credit goes to the seller if the buyer is a non-tax paying entity (continued)

5. Bus Purchase Tax Incentive(Energy Bill) • Credits would range from $2,500 to $32,000 depending on the size of the vehicle • $2,500-$4,000: Under 8,500 lbs. • $5,000-$8,000: 8,500-14,000 lbs. • $12,500-$20,000: 14,000-26,000 lbs. • $20,000-$32,000: Over 26,000 lbs. • The credit is effective for vehicles placed in service after December 31, 2005 and expires on December 31, 2010

6. Fuels Use Tax Incentive (Highway Bill) • The Volumetric Excise Tax Credit for Alternative Fuels (VEETC) • JOBS Act of 2004 created VEETC for ethanol and biodiesel • Highway Bill 2005 made CNG, LNG, LPG, and hydrogen eligible when those fuels are used in on-road vehicles (continued)

7. Fuels Use Tax Incentive (Highway Bill) • A 50 cent motor fuels excise tax credit is paid to the seller: • Per GGE of CNG • Per liquid gallon of LNG • The credit will be paid to eligible recipients on a regular basis without regard to the amount of excise tax paid (including tax exempts) (continued)

8. Fuels Use Tax Incentive (Highway Bill) • The value of the excise tax credit is offset by an increase in the motor fuels excise tax rate for both CNG and LNG: • CNG is increased from 4.3 cents per GGE to 18.3 cents • LNG is increased from 11.9 cents per LNG gallon to 24.3 cents (continued)

9. Fuel Use Tax Incentive (Highway Bill) • Begins on October 1, 2006 • Expires on September 30, 2009

10. Fuel Station Tax Incentive(Energy Bill) • A Tax Credit Equal to 30% of the cost of alt fuel refueling equipment: • Up to $30,000 in the case of large stations • Up to $1,000 for home refueling appliances • The existing $100,000 tax deduction for refueling property is repealed (continued)

11. Fuel Station Tax Incentive(Energy Bill) • Credit allowable for CNG, LNG, LPG, Hydrogen, E85 and Biodiesel (B20+) • Like the vehicle tax credit, provision allows tax exempts to pass credit through to seller of equipment • The credit is effective on equipment placed in service after December 31, 2005 and expires on December 31, 2009

12. Methane Molecule Benefits of NGVs • NGVs use an inherent clean fuel • Simple CH4 structure • Minimal combustion byproducts • 2007 HD NGVs meet 2010 standard • Less greenhouse gases • NGVs are proven and reliable • Nearly 5 million worldwide • NGV fuel costs are lower • Varies: $1.73/dge versus $2.65-3.00 for diesel! • Differential increases with new fed credit in 10/06 (continued)

13. Benefits of NGVs • NGV maintenance costs are = or < diesel • Natural gas engines are far quieter than diesel • NGVs run on American fuel • 85% from USA • Virtually all the rest from Canada • Huge domestic supply

14. A Wide Variety ofNatural Gas Vehicles Are Available • Sedans, Pick-ups/SUVs, Vans/Wagons • American Honda; all GMC brandsFord/Mercury/Lincoln via SVMs • Work/Vocational Trucks • Peterbilt, Freightliner, Freightliner CC,Sterling, Crane Carrier, Autocar, Isuzu, GM, Workhorse, Ottawa,Allianz, Schwarze, Tymco… • Bus and shuttle • NABI, Orion, New Flyer, SpecialtyEl Dorado-National, Champion, Supreme,Blue Bird, Thomas Built, Optima…

15. Natural Gas Powered Medium- and Heavy-Duty Engines and Vehicles • Emission Solutions Inc. • 7.6L NG – 175-265hp • Hybrid Energy Systems/USEIC • 6.0L HD (GM) • 11.9L (Mack) “dual-fuel” • John Deere • 8.1L HN04 – 250-280hp • 9.0L – 300+hp • Westport Innovations Inc • 15L “ISX-Gas” – 450hp • BAF Technologies • 6.8L(Ford) • Baytech Corporation • 6.0L HD (GM) • 8.1L (GM) • Campbell Technologies • 5.4L (Ford) • Cummins Westport • 5.9L “B Gas Plus” – 195-230hp • 8.3L “C Gas Plus” – 250-280hp • 8.9L “L Gas Plus” – 320hp • 8.9L “ISL-G” (’07) – 250-320hp

16. NGVs Are a “Good Fit” for Many Different Fleet Applications • Local/State Government • Airports • Refuse • Transit • School Districts • Utilities • “Short-Haul” Operations • Food/Beverage/Snack, Linens, Pkg. Delivery/Courier Services, Port/Rail, Newspapers, etc. • Local-Service Businesses • Plumbers, HVAC, Florist, etc.

17. Refuse Collection Truck Life-Cycle Costs(Taking Federal Vehicle Tax Credit Only) * Assumes 2.5mpg (diesel) and 20% fuel consumption “penalty” for S.I.N.G. engine vs diesel-cycle, a differential that is widely expected to diminish 3-4% in model year MY’07 engines and more in MY’10. ** CGCU natural gas dge cost shown. Diesel price is rack rate including fed/state motor fuels excise taxes. Estimate does not include any of $.556/dge CNG tax credit effective 10-01-06. *** Assumes equal maintenance costs. Natural gas vehicles have documented lower maintenance costs than comparable diesel units. NGV’s maintenance cost advantage is projected to increase as MY 2007-2010 diesel engines and exhaust after-treatment technologies are introduced.

18. Refuse Collection Truck Life-Cycle Costs(Taking Vehicle Tax Credit and Partial Fuel Tax Credit) * Assumes 2.5mpg (diesel) and 20% fuel consumption “penalty” for S.I.N.G. engine vs diesel-cycle, a differential that is widely expected to diminish 3-4% in model year MY’07 engines and more in MY’10. ** CGCU natural gas dge cost shown assumes that $0.40 of $.556/dge CNG tax credit is passed on to customer at pump. Diesel price is rack rate including fed/state motor fuels excise taxes. *** Assumes equal maintenance costs although NGV costs are generally lower. Also assumes that federal motor fuels excise tax credit is extended beyond 9-30-09.

19. Municipal Dump/Plow Truck Life-Cycle Costs(Taking Vehicle Tax Credit and Partial Fuel Tax Credit) * Based on Freightliner M2 with dump-plow pkg; CNG unit with 3 CNG tank vertical package ** Assumes mixed city/suburban duty cycles, 8mpg (diesel) and 10% fuel consumption “penalty” for S.I.N.G. engine vs diesel-cycle. *** CGCU natural gas dge cost shown assumes that $0.40 of $.556/dge CNG tax credit is passed on to customer at CGCU pump. Diesel price is rack rate without fed/state motor fuels excise taxes. **** Assumes equal maintenance costs although NGV costs are generally lower. Also assumes that federal motor fuels excise tax credit is extended beyond 9-30-09.

20. For more information please contact: NGVAmerica400 N. Capitol St. NW; 4th floorWashington, DC 20001 Paul Kerkhoven (202) 824-7363 Pkerkhoven@ngvamerica.org Stephe Yborra – Director of Marketing & Communications (301) 829-2520 Syborra@ngvamerica.org

21. ENERGY BILLVehicle Tax Incentives • Suggested RFP guidelines for tax exempts: • Have supplier quote “comparable” vehicle cost and incremental amount for AFV up front • State the amount of tax credit they will file with IRS • Show amount of tax credit to be allocated back to you, the customer • Subtract that amount from quote price