Full -Track Ballot #05-2015

1. Full -Track Ballot #05-2015 August 12, 2015 San Antonio, TX

2. FT #05-2015 • Is not a dual fuel issue • The same problem exists for any interjurisdictional carrier with a pure LNG vehicle • We need a consistent process for LNG reporting and disbursement of taxes between jurisdictions (Like CNG FT#5-2013)

3. FT #05-2015 • Is not a dual fuel issue (continued) • There is no impact to sovereignty (a jurisdiction tax rates and units of measure are their responsibility) • Other standards exist to ensure consistent reporting and distribution of taxes between IFTA members (e.g., distances, volumes, and currency) • All we are changing is how to report LNG for IFTA purposes

4. FT #5 -2015 • Natural gas is sold in two physical states: • Compressed Natural Gas (CNG) • A high pressure gas (e.g., 3,000 to 3,600 psi) 2. Liquefied Natural Gas (LNG): • A super-cooled liquid (e.g., -260°F or -170°C)

5. FT #05-2015 • LNG is sold three different units of measure: • Gallons(3.5 lb per G) in 24 jurisdictions • Diesel Gallon Equivalents(6.06 lb per DGE) in 24 jurisdictions • Kilograms in 10 jurisdictions

6. FT #05-2015 CDN Jurisdictions US Jurisdictions Fuel Purchases Kilograms DG - Straight Weight (3.5 lb = 1 gallon) DGE - Energy Equivalent (6.06 pounds = 1 DGE) Two Questions: What does a carrier report regarding LNG purchases to their base jurisdiction? How does the carrier convert their purchases accurately and consistently?

7. FT #05-2015 CDN Jurisdictions US Jurisdictions DG - Straight Weight (3.5 lb = 1 gallon) Kilograms DLE - Energy Equivalent (0.73 kg = 1 DLE) DGE – Energy Equivalent (6.06 pounds = 1 DGE)

8. FT #05-2015 P1320 - FUELS NOT MEASURED IN LITERS OR GALLONS For reporting tax rates, and audit results and for transmittals between IFTA jurisdictions, liquefied natural gas shall be reported in diesel energy equivalent measures, using the following conversion factors: • a diesel gallon equivalent in U.S. jurisdictions weighs 6.06 pounds, and • a diesel liter equivalent in Canadian jurisdictions weighs 0.73 kilograms).

9. FT #05-2015 CDN Jurisdictions US Jurisdictions Fuel Reporting

10. FT #05-2015 • Jurisdictional changes: • Convert and provide to IFTA their LNG tax rates in energy equivalents (if not already) • IFTA converts for volume and currency differences and posts for use by all jurisdictions as they do now • Obtain LNG energy equivalent tax rates from IFTA and then: • Share with carriers • Instruct carriers to use and how to convert their purchases: • Kilograms to DLE or DGE • Gallons to DLE or DGE

11. FT #05-2015 • Jurisdictional Changes: • Jurisdiction tax systems process tax returns in energy equivalents • Transmit via the Clearinghouse (and non-Clearinghouse jurisdictions) in energy equivalents • Report audit activities in energy equivalents

12. Questions / Discussion

13. Updates - Duel Fuel • Four new fuel types have been added to the Clearinghouse for dual fuel reporting: • For Diesel / LNG vehicles: • DL - The fuel type to report diesel used in a dual fuel vehicle with LNG; • DLG - The fuel type to report LNG used in a dual fuel vehicle with diesel • For Diesel / CNG vehicles • DC - The fuel type used to report for diesel used in a dual fuel vehicle with CNG; and • DCG - The fuel type to used to report CNG used in a dual fuel vehicle with diesel

14. Updates - Duel Fuel • DL and DC fuel types are: • Diesel fuel, taxed at the diesel tax rate shown on the tax rate matrix. • Simply used to report diesel fuel used in dual fuel vehicles (where LNG or CNG is the second fuel). • DLG and DCG fuel types are: • LNG and CNG respectively, taxed at the applicable rates shown on the tax rate matrix. • Simply used to report LNG and CNG used in dual fuel vehicles (where diesel is the second fuel).

15. DCG DL/ DC DLG

16. Questions / Discussion

17. Thanks!

18. FYI - Following slides are for reference purposes in case questions come up, and include and example of a complete IFTA Return reporting process for three fleets: • Pure diesel • DL / DLG • DC / DCG

19. Dual Fuel Vehicles - 101 • At a high level: • Pure Diesel Diesel Purchased / Distance • Dual Fuel Diesel Purchased / Distance LNG Purchased / Distance

20. Dual Fuel Vehicles - 101 • Think of the dual fuel vehicle as two different trucks (or fleets) DL Purchased / Prorated Distance DLGPurchased / Prorated Distance

21. Recommended Reporting Process • At a high level: • Dual fuel vehicles must be treated and reported separately (e.g., gasoline fleet, diesel fuel fleet, LNG fleet, dual fuel fleet) • Duel fuel vehicles must be treated and reported as two vehicles: • Separately reporting the distances travelled and fuel purchased • Pro-rating the distances to avoid double counting

22. Recommended Reporting Process

23. Recommended Reporting Process • Pro-rating more complicated if a carrier has exempt distances • Developed and tested worksheet which can be used to accurately prorate the “Total Distance” and “Taxable Distance” between fuel types.

24. Recommended Reporting Process

25. Complex Example - IFTA Tax Return Reporting • Assumptions: • 1 Carrier with three IFTA fleets: • Pure Diesel; • DL/DLG; and • DC/DCG • No exempt fuel purchases and no exempt distances • All fuel purchases and distances have been converted into the base jurisdiction’s units of measure and currency

26. Example - IFTA Tax Return Reporting

27. Example – For DL/DLG Fleet

28. Example – For DL/DLG Fleet

29. Example – For DC/DCG Fleet

30. Example – For DC/DCG Fleet

31. Result for the 3 Fleets

32. Results for the 3 Fleets (Just a different way to display results)

33. Questions / Discussion

34. Thanks!