Proceedings of the Standing Senate Committee on
Energy, the
Environment and Natural Resources
Issue 3 - Evidence
OTTAWA, Tuesday, June 11, 1996
The Standing Senate Committee on Energy, the Environment and Natural Resources met this day, at 9:00 a.m., to continue monitoring all matters related to the implementation and application of the Alternative Fuels Act.
Senator Ron Ghitter (Chairman) in the Chair.
[English]
The Chairman: From the London Police Department, we have Mr. Gar Irwin and, from the Niagara Regional Police, we have Mr. Harry Lewis. Welcome gentlemen. Our committee meetings are quite informal, so please feel at home.
When you have finished your submission, we will just have a general chat so that we may learn from what your experience.
Mr. Gar Irwin, Director, Fleet Facilities, London Police Department: Mr. Chairman, as director of the fleet facilities for the London City Police, I am a certified "A" licensed motor vehicle mechanic with a Canadian interprovincial seal. I am responsible for the specifications for the purchase of new vehicles for the fleet branch of the London Police and the dispersement of retired vehicles.
The rationale of what vehicles operate on what fuels is part of my present and future strategy. I also specify what conversion equipment is required to run these vehicles on liquid propane. I manage a staff of 20 support personnel which maintains the London fleet at its own repair facilities located at police headquarters in London. The fleet comprises 138 vehicles, of which 92 run on propane. The balance runs on gasoline.
My short-term objective is to maintain this complement because I feel it is a well-balanced mix - 66 per cent of the vehicles are run on propane and 34 per cent are run on gasoline. By September, the local natural gas suppliers propose to supply natural gas vehicle dispensing equipment, at a cost matching or bettering my propane pricing per litre. I have expressed concern about vehicle range to the suppliers, but they have indicated there should no problem. We will see. These discussions will be a factor in the decision to be taken by the London police as to whether the department will introduce natural gas to another portion of its fleet or not.
The legislation will not impact much at all on the London police as a municipal identity because we made the ultimate choice of fuel, liquid propane, years ago.
However, there are applications where converting vehicles at a cost of $3,000 is not practical. The kilometrage driven in the lifetime of some vehicles would never recover the price difference in fuels to pay for the conversion. I have also indicated in past presentations that, for surveillance purposes, the equipment is difficult to hide.
In my opinion, the secret to a successful alternative fuel program is rigid conversion specifications and a rigid preventative maintenance schedule provided by disciplined support staff that believes that alternative fuel for that vehicle was the proper choice. Thank you.
The Chairman: Thank you very much. Next we will hear from Mr. Lewis.
Mr. Harry Lewis, Fleet and Store Manager, Niagara Regional Police: Thank you for inviting me back again to speak of alternative fuels in police fleet vehicles.
Propane does work on police patrol vehicles. A propane- powered cruiser cannot only reduce fuel consumption, service costs and reduce emissions, it may also increase reliability and range.
As I see it, the main players in getting vehicles on alternative fuels are the users gaining acceptance from fleet management for their wisdom in choosing the right vehicles and the right fuel for the application; conversion centres keeping up with technology and providing an excellent product that will use the fuels; fuel suppliers keeping prices low and making sure that the infrastructure is in place to refuel; vehicle suppliers and manufacturers ensuring that vehicles are either converted at the factory or are convertible to alternative fuels; and the government by putting in place the control regarding costs, resale, road tax, and the like.
The Niagara region is approximately 2,000 square kilometres and is populated by about 400,000 people. The Niagara regional police service clocks up over 8 million kilometres per year with a minimum of 197 vehicles. Of these 197 vehicles, 80 are propane-powered and they accumulate between 5.8 and 6.2 million kilometres a year. It usually runs about 75 per cent of our total kilometres.
We purchase our fuel through the credit card system, through retail outlets, and we burn between 1.3 and 1.5 million litres of propane per year. The job of burning this propane is shared by approximately 570 uniformed staff members. We have one supervisor, who is shared, to run our fleet maintenance facility, one lead hand - and that has just increased to three mechanics - and we have 1.5 clerks in our fleet maintenance department.
In 1993, we saved approximately 10 per cent of our budget by running alternative fuels, which amounts to slightly over $200,000 in one year. In 1994, the savings dropped to just slightly over $100,000, and in 1995 it looks like we have only saved about $30,000 by using alternative fuels.
Our projections, through the development of new fuel systems to operate our vehicles on, indicate that, in 1996, we should save $60,000; in 1997, over $100,000; and in 1998 we should be back to over $200,000 savings per year by burning alternative fuels.
1993 was a very good year. Our fleet maintenance department had just gotten our patrol vehicles to the optimum level through a rebuilding and replacement program. We went through an 11-month replacement cycle instead of a 6-month replacement cycle. We pre-approved our budget so we could start replacing vehicles in January, which is all basic, common sense fleet management policy to run any fleet effectively.
We pre-developed our 1993 propane conversion so that when our cars were delivered they could be converted immediately. We saved over two cents a kilometre on fuel and over one cent a kilometre on service costs. We had a better range than gasoline, the vehicles were more reliable, and we had a proper preventive maintenance system in place, with the proper staff and an adequate budget to operate. We saved a lot of money that year.
In 1994, propane technology fell behind gasoline technology. We ran into backfires from propane, and poor performance which was later corrected through adjustments. Gasoline fuel economy increased in our vehicles by almost one-third, whereas propane remained the same. We had high maintenance costs due to towing and replacing equipment after backfires. Backfires broke the air cleaners and other components of the car. We had high preventive maintenance because the ignition systems were not adaptable to propane fuel. We had a six-month replacement cycle and we only replaced 24 of our protective vehicles that year, so we spent more time trying to keep old vehicles on the road instead of doing preventive maintenance.
Our lack of savings this year was not only due to propane and the difficulties with propane conversions, but it was also due to a lack of management foresight and a lack of proper budgeting to supply better servicemen to do the job.
We were kicked out of our maintenance facility because the building was deteriorating. We had to move several times. In 1995, fuel economy did slightly increase. The backfiring increased. Again, we had poor performance.
Our maintenance costs were only slightly higher than cars running on gasoline, but the reliability was barely acceptable. We had a lot of down time. The officer down time was unacceptable because with the downsizing of the police service, a general constable has to do more running around and answer more calls than in past years. Only 35 of 70 projected vehicles were replaced, again leaving us with older vehicles on the road. This was not a propane problem but a problem of poor fleet management. However, it tend to make propane look like it is not a good choice.
There were also late replacements because of budget buy-outs and strikes at the factory. Our maintenance staff was still in remote locations, which were discovered to have poor management.
The bright spot of 1995 was the Dodge liquid fuel injected propane. It seemed to have more power than its gasoline counterpart and the fuel economy was at least as good. This type of propane conversion is what I hope we will see in the future. It is an excellent choice and it works extremely well.
We also had one car converted to work with GFI, that is, we have a multi-point gaseous fuel injection system on one of our cars which, as far as I know, is the first one in North America. This car runs extremely well, and it will result in fuel savings of two cents a kilometre. The power level is good, and it seems to operate safely and reliably.
In 1996 we have had to deal with delivery and budget delays. General Motors has a new propane technology which we will install on these vehicles. Once again our fuel of choice for 70 per cent of our patrol kilometres will be propane. Propane must win back the user acceptance which has been lost in the last two years. In 1993 our constables were afraid to drive a propane-powered vehicle. 1994 and 1995 were very bad years in the gasoline powered car, and we are hoping to turn that around. I am sure that will happen once the GFI conversions are installed. It will take two more years to reach an acceptable level.
The bright spot this year is that 68 of our 72 projected vehicles for replacement are being replaced. We have moved into a new repair facility which should provide us with proper preventive maintenance.
In 1996, the manufacturers, and the conversion people are starting to work together. They have realized that they have fallen behind in keeping up with the technology and delivery systems of gasoline vehicles. I think we will now see more cooperation.
Senator Kenny: My first couple of questions are for Mr. Irwin. Can you tell us what year the London police force started using propane?
Mr. Irwin: We started in 1983 when we converted the complete patrol division over to dedicated propane fuel. We have been on that program ever since. In fact, since 1983 we have saved the City of London over $2 million in fuel expenses. We have everything from patrol vehicles to service trucks, prisoner security vehicles, sports utility vehicles, four-wheel-drive vehicles.
The only vehicles not on propane, of course, are the unmarked cars. Their kilometrage is just not high enough to pay for the conversion costs.
Senator Kenny: Have you tested your vehicles to see whether they perform as well as gasoline-powered vehicles, and do the users find them satisfactory, or are you experiencing complaints about their performance?
Mr. Irwin: Every vehicle that is converted to propane is first run on a dynamometer and those horsepower readings are registered. When the conversion is completed it tested again. For example, a 1994 vehicle had 117 horsepower on gasoline and 110 on propane. The difference is minimal. On a stop-and-go test, zero to 120, the vehicles are within a half a second, gasoline being a little stronger but, again, the difference is negligible. We have been on the program, as I said, since 1983, and performance is not an issue.
Senator Kenny: We have heard a fair bit about the Michigan police trials. Are you familiar with these studies?
Mr. Irwin: Yes, sir.
Senator Kenny: Do they have any resonance, in your experience, in London?
Mr. Irwin: It reflects on whether your police force has a pursuit policy or not. Most police forces have a pursuit policy in effect. However, high-speed driving is just about non-existent in the city of London. There is really no relationship between the Michigan trials and the London police vehicles being on propane.
Senator Kenny: If you did not have a pursuit policy, would half of a second make a difference?
Mr. Irwin: No, sir.
Senator Kenny: Do the constables who drive these vehicles know the difference, in an operational sense? Do they have problems that they would not have with gasoline?
Mr. Irwin: There have been absolutely no complaints relating to performance, because performance level differences are insignificant. The officers have driven these cars since 1983. In fact, most of them have never driven gasoline patrol vehicles for the London police.
Senator Kenny: In previous testimony before this committee, we heard concerns expressed about the limited space in the trunk of vehicles and the possibility of leakage of volatile fuel igniting electronic equipment that might detonate ammunition stored in trunks. Have the London police encountered any problems in this regard?
Mr. Irwin: No, sir. The tanks are actually outside of the trunk in a vertical position, moved as strategically close to the rear axle as possible. Then a subfloor is put in. The remote fill cavity is a stainless steel box in the same location where the gasoline fill box was, so all the fuel is external to the vehicle. There is sufficient trunk space. We carry full-size spare tires and all the necessary equipment that most police cars carry. In fact, because of that set-up, we never have to change the suspension. We use OEM equipment.
Senator Kenny: Do you have any unusual maintenance problems with your vehicles? Is your maintenance as cost-effective with your propane vehicles as it is with your gasoline vehicles?
Mr. Irwin: Our vehicles are on a preventive maintenance program which is based on the amount of litres of fuel consumed because of all our idling time. That is the only real common denominator. We have a fuel management system. There is a criterion plateaux when vehicles consume a certain level of fuel, whether it be gasoline in an unmarked detective's car or propane in a patrol vehicle, and then certain preventive maintenance is preformed.
The only difference in relation to propane is that we periodically check the fittings with soap and water to ensure there are no leaks. However, it is the same procedure whether you are cleaning a throttle body for a propane vehicle or for a gasoline vehicle. To answer you question, we do a fitting inspection, but that takes very little time.
Senator Kenny: Do you cost your vehicles on a full-life basis?
Mr. Irwin: I am not sure what you mean by that, senator.
Senator Kenny: Do you calculate the purchase price, maintenance costs, fuel costs and the resale value? I am referring to the total cost to the taxpayers in London.
Mr. Irwin: We know what it is, but I cannot provide that to you right now.
Senator Kenny: How do you calculate your savings figures?
Mr. Irwin: We know what the cost of the vehicle is. We know what the cost of the conversion is. We know that we can claim for the rebate and for the gas guzzler tax. Our patrol cars have a life cycle of 160,000 kilometres and then they are pulled out of service.
If you ran a patrol vehicle on gasoline, and we had an example of that where the average cost of gasoline for the London police was 50.58 cents a litre in 1994 and the average price of propane was 21.07 cents. This includes road taxes. To run a vehicle up to 160,000 kilometres, which is a lifetime parameter for patrol cars, we would use 41,237 litres of gasoline. If you factor in an 85-per-cent efficiency factor, you would have to purchase 48,515 litres of propane to run the same distance.
Therefore, you would have a gross savings between the two fuels of $10,676. You would then include the cost of the conversion in your calculation, which is $3,047, and then apply the PST grant of $750 and claim for the gas guzzler tax. Those costs and grants amount to $2,222. If you deduct that from the $10,676 you get a net savings difference in fuel of $8,454 in the lifetime of a 1994 patrol vehicle if you ran one on gasoline up to 160,000 and you ran the other one on propane. Basically it amounts to almost half the cost of a vehicle.
Senator Kenny: If you could give the committee a ball-park estimate, how much do you believe you have saved the City of London over the past decade while you have been on alternative fuel?
Mr. Irwin: Up to 1994, $1,993,000 was saved in fuel. We went over $2 million in 1995. In 1983, we saved $27,000, and the figure started moving up. In 1994 it was $71,000; and in 1985 it was $133,000. It varies, but in 1993 we were up as high as a $263,000 difference.
Senator Kenny: This is in one city with how many vehicles on propane, again?
Mr. Irwin: Ninety-two, sir.
Senator Taylor: I am a propane user myself. How cold does it get in London? Do you have any trouble with starting your vehicles?
Mr. Irwin: Most of our vehicles are at London police headquarters where they are parked underground. We do have some outside parking.
Senator Taylor: Underground, with propane?
Mr. Irwin: Yes, sir. There are no problems with that. We have the appropriate sensors in the building to detect any leaks. It meets the code and we have had no problems at all with that since 1983.
At a forum I attended I was very frank in admitting that, by parking underground in southwestern Ontario, we had an advantage over somebody who would park outside in the prairies. However, somebody at that workshop piped up and indicated that they had over 40 vehicles parked outside in western Canada and starting them was not an issue. As you know, you can always install a block-heater. In fact, even gasoline vehicles in Timmins and North Bay have block-heaters.
Senator Taylor: I have found that, with temperatures of 30-below you might apply the same odds of getting started as you would to winning with a 6-49 ticket. In fact, some people use a dual system. Do you use strictly propane?
Mr. Irwin: Yes, specifically dedicated, single.
Senator Taylor: Did I hear you correctly when I understood you to say that you traded all cars in, whether propane or gasoline, with the same kilometrage of 150,000?
Mr. Irwin: Patrol vehicles are taken out of service at 160,000 kilometres. Our unmarked vehicles do not get the same mileage or meterage put on them and they are pulled at six model years.
Senator Taylor: My experience as a user is that the major advantage of using propane is that the motor lasts much longer. Consequently you are not getting value unless you trade it in at about 250,000 kilometres.
Mr. Irwin: You must keep in mind that after being a police car our cars have another life, and that is usually as a taxi. Regional or municipal bylaws vary regarding vehicles being used as taxis, but in the London area the vehicle cannot be more than six model years old. Some of our cars will hit 160,000 kilometres at 3.5 model years, but many of them will go to four. If they go longer, the taxi industry is not interested in repainting them to their company colours to use them just for a year. They are more interested in a police car which they know has been properly maintained and that has already been converted to propane.
We have a waiting list, believe it or not, of people calling asking when our vehicles will be going up for bids. The recovery costs are an important part of this whole scenario. We have to know at what year the cabbies will buy them. At this particular point the preference has been for four model years. They are waiting for the cars to come out of service.
Senator Taylor: My experience has been that a motor with 150,000 propane kilometres on it is just barely broken in, whereas with gasoline it is about 50 per cent more.
Mr. Irwin: You can extend your oil change intervals and get an enhanced life on your spark plugs. As well, the inside of the engine looks cleaner. I believe that, since they have taken lead out of gasoline, there is better lubricity in liquid propane than there is in today's gasoline that we buy at the pumps.
Senator Taylor: My last question, if I may, is on underground parking. When I try to park my propane vehicle underground, the City of Edmonton goes ape. Do you accept the risk of a propane leak?
Mr. Irwin: No, sir. There is no safety issue.
Senator Taylor: Do you think this is all hype?
Mr. Irwin: Yes. It is a mindset. Since 1983, we have never had an leakage incident like that. We have propane sensors and monitoring devices at police headquarters so that, if there were a leak, the sensors would set off an alarm. We had an incident the other day where somebody, driving in off-road conditions, cracked a valve and the sensor indicated that there was a concentration in one area. They vehicle was driven to the outside parking lot and the tap was turned off - it happened to be on the weekend - and they waited until the repair facility opened up. The valves are designed, if they are hit, to crack and the fuel just dissipates. Parking underground is not an issue.
Senator Taylor: Propane is a heavy gas. Boaters who use it have to be aware of the fact that the propane fumes will find the lowest spot and stay there.
Mr. Irwin: It stays low, but it dissipates.
Senator Taylor: Smokers might find themselves meeting their Maker earlier than they thought.
Mr. Irwin: We have a no-smoking policy in our building. It is not a safety issue.
Senator Adams: What type of cars do you buy? Do you buy Ford, Chrysler or GM? Do you use different types of models?
Mr. Irwin: Our patrol car fleet is exclusively Ford Crown Victoria. We also have Chevrolet Suburbans, a Ford Explorer, a couple of Aerostar vans, a Dodge panel van, some Chevrolet prisoner vans, and a couple of half-ton Chevrolet pickup trucks. There is a mix in the fleet, but as far as patrol car goes, it is the Ford Crown Victoria. When you are only 18 miles from the assembly plant, that is probably what you will be driving.
Senator Adams: About a month ago we had witnesses about from Ford, Chrysler and GM, and we asked them about the cost of changing a vehicle over from propane to natural gas. Some, but not all, are interested in manufacturing cars for propane and natural gas, but there is not enough demand to ensure quality in manufacturing.
That is why I am asking you what model of cars you are using. Most manufacturers are not enthusiastic about building new types of vehicles that will run on either natural gas or propane. Do you have any difficulty in selecting a model which can be easily converted to run on propane or natural gas?
Mr. Irwin: As far as propane goes, that does not cause any difficulty. As far as natural gas is concerned, the Ford Motor Company is producing a dedicated natural gas vehicle at the assembly plant as a dealer special order. They are available this year. They are a little expensive. It is produced as a $7,000 option.
Senator Adams: You talked about your vehicles clocking up to 160,000 kilometres before changeover. Could you elaborate on that?
Mr. Irwin: That has been the case since 1983. Our studies indicate found that if you keep running these vehicles beyond that 160,000 kilometres then you incur higher maintenance costs. Not only that, if I run them longer than 160,000, they become too old to become a taxicab and I lose that recovery money. Therefore, 160,000 kilometres seems to be the ideal time to pull them.
Do not forget that they may have 160,000 kilometres on the odometer, but ours are city vehicles and that 160,000 could probably equate to 300,000 kilometres if you include the idling time. You just cannot go by the meterage that is indicated on the odometer. Technically the vehicles have probably closer to 300,000 kilometres on the engine when we take them out of service.
Senator Adams: What is the average number of years?
Mr. Irwin: It is three-and-a-half model years on a supervisor's car because they do more driving, and about four model years on an actual patrol vehicle.
Senator Adams: We heard some witnesses from B.C. speak about conversion to natural gas. They figure that in less than two years they will have recovered the cost of converting from natural gas.
Mr. Irwin: Using 1994 figures, if you ran the vehicle to 160,000 kilometres, you would be saving $8,000 in fuel. You would pick up about $2,000 a year. You would pay $3,000 for a conversion, so you would have paid for the conversion in about 18 months.
Senator Cochrane: Why did you decide to consider alternative fuels, and why did you decide to start with propane? Whose idea was it in London to go forward with this program?
Mr. Irwin: Superintendent Robert Simpson, looked at alternative fuel, for a couple of reasons, the main reason being cost. Superior Propane or ICG were offering fuel at 21 cents a litre, and at that time in 1983 gasoline was above 45 cents. At that time propane conversion cost about $1,800 per car. The rebate for the PST was $750. The decision was, therefore, based on cost savings.
Another reason for the decision to convert was related to the prospect of another fuel embargo or a situation where gasoline would become a commodity that was not easily available because of whatever world conditions existed. They did not want to have all their eggs in one basket as far as fuel for vehicles was concerned. In 1982 two cars were converted as a pilot project. Their performance and maintenance were monitored, and they were pleased with the results. As a result, in 1983 the whole fleet was converted.
We are now going into our thirteenth year and we have been very pleased with the savings. As Harry has indicated, periodically you get into the odd vehicle with different electronics, but you work around those things. I mean, it is no different from when you get some drivability concerns or other concerns with gasoline-powered vehicles. Basically, for the London police, for what we have been doing and where we are located and how we house our vehicles, there is no other choice of fuel at this time for us.
Senator Cochrane: Then you would have no problems with this bill that we are discussing here?
Mr. Irwin: No, not at all.
Senator Cochrane: Would you make any recommendations to other police departments?
Mr. Irwin: We work under ideal conditions. The Niagara Regional Police will be moving to a new location where the fleet will be spread out. We have an ideal condition where we see our cars every day, we have our own support staff, our own mechanics, our own repair facility. It is our program, and we will continue to make it work. It is because of our efforts that it has been a success.
In some other locations where the alternative fuel, whether it be propane or natural gas, is treated as a "second-class citizen" so to speak, and there is no attempt to provide proper preventive maintenance or inspections, then the fleet starts to become second-class, whether it is run on gasoline or propane. We are under one roof and we see the cars every day, so we may have a more ideal set-up than some other regional police forces where their vehicles go to regional garages where the garbage packer and a police vehicle will be fixed at the same location. The vehicle may be serviced at an independent service station and it may not get proper attention. Our situation is ideal.
Senator Cochrane: I was impressed with your statistics. One year your savings amounted to one amount and the next year it was a lesser amount, then the next year it was a greater amount. Is that fluctuation as a result of some problems you encountered?
Mr. Lewis: Yes. We were moving into a new facility, we had budget cuts, and we did not replace as many vehicles as we should have. Our efforts went to just keeping the cars on the road instead of doing preventive maintenance. I have no doubt that propane fuel, even for the Niagara Regional Police, is still a good choice and we will get back up to saving at least $200,000 a year.
Like anything else, we have to keep ourselves educated, we have to put a proper maintenance program in place. In the last couple of years, we have had difficulties doing that. Propane has caused a few problems for us because the technology fell behind. However, it is not all a propane problem; some of it relates to our own management style.
Senator Kenny: Mr. Lewis, could you describe for the committee what process you go through to start up with an alternative fuel supplier? How did you break into alternative fuel use?
Mr. Lewis: Back in 1981, a sergeant with the Niagara Regional Police went to a sales pitch one evening which was being given by a propane supplier. Back then if you had a car converted, you could write off the provincial sales tax on the car which would just about pay for the conversion. As well, the fuel was cheaper, so we thought it was worth a try.
Senator Kenny: Then what happened? Can you describe what it is like working with the fuel supplier? What do they bring to the party, and what do you folks bring to the party in order to get your fleet working properly?
Mr. Lewis: We put ours out to tender through the Regional Municipality of Niagara, so we would have a bigger buying source. Because we are spread over such a large area, it is not cost-effective for us to install our own pumps, so we buy through the credit card system from retail suppliers. By going through the tendering process, we get competitive bids on the price of fuel. That can be done either on a firm price per year or by guaranteeing so much profit to the propane company. Presently we are working on about half a cent per litre. Each car has its own credit card, so they can pull up to any Superior Propane outlet, when they are open, and refuel.
As far as conversions are concerned, we stipulate that on our vehicle tender, so we receive an already converted vehicle. We put enough riders in there to assure us that we will have the equivalent of a factory equipment warranty. We have a choice of which equipment we use. We pre-approve the conversion before they are actually done so, in effect, we are writing the conversion spec. In the optimum years we usually have a car between August and November of the previous year that we convert just to work out the bugs, so that when our main shipment hits in January, February of the following year, we know that the conversion will work.
Senator Kenny: Are they of any assistance to you in selecting which vehicles you want to convert?
Mr. Lewis: They are getting pushier in that way, yes. But they made mistakes in the past by converting anything anybody brought in, and if the user is not happy, if it is not a good vehicle to convert and there are engine problems down the road, you know it will be blamed on the alternative fuel. They are trying to encapsulate the models of vehicles they will convert.
Senator Kenny: What about infrastructure? What sort of refuelling problems do you run into?
Mr. Lewis: In some smaller towns and villages, the gas station may not be open because they do not have enough volume of business to justify a full-time attendant. Alternatively, the situation may be restricted by municipal bylaws. Superior has served us well. They have put larger tanks in vehicles so that we can carry enough fuel to run through from 10:00 p.m. until 8:00 a.m. However, if the car does not get there before l0:00 p.m. there is a problem. The officer will usually have to drive out of his patrol area to fuel up at a 24-hour station.
When we have applied the appropriate pressure, they have always managed to find a supply in a given area that will stay open for us. For the last four or five years, with economic restraints, there has been quite an effort to ensure that we have a supplier in each of our patrol areas which stays open late enough to meet our demands, but our suppliers have managed to do it.
Senator Taylor: Have you had any experience with liquified natural gas or natural gas under pressure versus propane at all, or have you always used propane?
Mr. Lewis: Yes, I used to convert to natural gas vehicles. It is a good fuel but, like propane, you have to use it where it is going to be effective.
Senator Taylor: Do you find much difference in the performance of a vehicle equipped with either?
Mr. Lewis: I would say they both perform well. Natural gas, because of the amount that you can carry, has a more limited range than propane, which is why we stick with propane.
Senator Taylor: To get as much mileage out of the same volume?
Mr. Lewis: Correct.
Senator Taylor: It is supposedly a safer type of fuel. You are allowed in underground garages with it because it is a lighter gas so it dissipates upwards instead of finding the lowest spot.
Mr. Lewis: It can also get trapped inside a building and cause a lot of problems. It is under more pressure, and that can creates problems.
The Chairman: Thank you, Mr. Irwin and Mr. Lewis for sharing your experiences with us and confirming what this committee has said from the start, that this is a very important alternative fuel which we would like to see being used more within the government. You have been very helpful in providing us with the information. Thank you on behalf of the committee.
We now have with us witnesses from the RCMP. Good morning, Chief Superintendent Boire. We are looking forward to your presentation. Please proceed.
Mr. Dale Boire, Chief Superintendent and Acting Director, Royal Canadian Mounted Police: On behalf of the RCMP, thank you for inviting us to appear before the committee today to make a presentation on the subject of the RCMP's implementation of the former Bill S-7. Before we begin I would like to introduce Mr. Alfred Dupuis, the acting officer in charge of the Material and Service Management Branch. Also assisting us is Mr. Don VanDusen, the officer in charge of our Fleet Program Administration section.
During the time allotted for our introductory presentation, we would like to provide you with a greater level of insight into the RCMP's evolving strategy as it relates to realization of the former Bill S-7. Before turning the presentation over to Mr. Dupuis, however, I would take this opportunity to reaffirm that the RCMP has always supported both the spirit and the intent of this proposed legislation. We are pleased to be before the committee today to demonstrate our commitment to this proposed legislation and to outline elements of our strategy for its implementation within the RCMP. Mr. Dupuis will now take members of the committee through a brief presentation of the RCMP's strategy as it relates to implementation of the former Bill S-7.
Mr. Alfred A. Dupuis, OIC, Material & Service Management Branch, Royal Canadian Mounted Police: Despite much recent discussion and debate within the force surrounding the challenges and operational issues proposed by this legislation, the RCMP firmly believes that the outcomes and benefits of the act will be both desirable and obtainable. Although it has been and will continue to be a challenge for us as an organization to live up to the expectations contained in the former Bill S-7, we are confident that we will be successful in this endeavour.
As the managers of the largest most diverse and most widely deployed of all federal fleets, my colleagues and I would be remiss if we did not indicate the extent of the challenges we have faced during the past year in our efforts to come to terms with the proposed legislation. It has, at times, been a difficult process for us. Nevertheless, as indicated, the RCMP's background documents were forwarded to the committee last week. Let me assure you that, despite the very real operational challenges ahead of us, the RCMP is fully committed to the implementation and realization of Bill S-7.
During the past year our efforts within the RCMP have focused on attempting to assess the impacts of legislation and developing the framework of a strategy to ensure compliance.
During the course of this presentation, I will provide the committee with an overview of our vehicle management program at the RCMP, the challenges and issues we face, and in particular our strategy with respect to the use in adopting the alternative fuel vehicles.
As you are aware, the scope of the RCMP police operations extends across Canada from large urban detachments in the lower mainland of British Columbia to the small remote communities in the north such as Inuvik. Our wide geographic dispersion and decentralized operation structure has been and continues to be a factor in managing a sizeable RCMP vehicle fleet on many levels. As you can see, we have 14 divisions and over 700 detachments. We provide service to our clients in eight provinces, two territories, and we have municipalities within that.
For example, to an RCMP member working in the field, his or her police vehicle is, for all intents and purposes, that individual's office, particularly in smaller and more sparsely populated communities. A large part of an entire day shift is often spent within the confines of that member's police vehicle.
Because of members' close association and strong dependence on the characteristics of their vehicles, such as safety features, performance capabilities and occupational health and safety factors, any occurrence which affects these characteristics must be thoroughly examined to avoid jeopardizing safety, emergency response capability, or the effective delivery of police service.
Our clients are another major consideration when it comes to adopting substantial changes in the way we manage resources such as motor vehicles. Not only is the RCMP accountable through our minister to parliament and the people of Canada for the manner in which we manage these resources, but we also have a direct responsibility to our contracting police clients since they are the ones who, in many cases, have provided the financial resources which we use to acquire, operate and maintain our motor vehicle fleet, not to mention several other categories of assets.
The point is that for most of our vehicles, 70 per cent of the cost is borne by our clients, provinces, municipalities and territories, and 30 per cent by the federal budget. That influences where the funds are to be found.
In fact, the majority of the RCMP's motor vehicles are deployed in jurisdictions governed by our contracting police clients. As with many other similar initiatives, such as our community-based policing efforts, member safety campaigns, and the likes, the success of the Bill S-7 realizations within the force hinges to a great extent on the level of support and commitment provided by our clients.
I bring this to the attention of the committee not as an indication of our restrictions or inabilities, but merely to illustrate the extent to which we operate within the context of our contracting police operation, and how this translates into a set of operational realities that are unique to the RCMP among the other federal institutions.
Unlike other federal organizations which, relatively speaking, operate substantially smaller motor vehicle fleets, the RCMP is responsible for managing what amounts to almost 65 per cent of the federal government's entire fleet operations.
Again, unlike most other federal organizations, the RCMP utilizes its motor vehicles to a very great extent. While most federal organizations typically accumulate anywhere from 2,000 to 10,000 kilometres per year, on average, per vehicle, RCMP vehicles typically accumulate an average of upwards of 20,000, 30,000 kilometres per year. It is normal practice for over 75 per cent of our entire fleet to have a life cycle of three or four years. This reality is in stark contrast to many other federal organizations where vehicles are commonly held or operated for periods of up to 7 or 10 years.
Relative to other federal organizations, this reality presents the RCMP with a different set of limitations and possibilities in response to initiatives such as Bill S-7 which has an across-the-board impact on our motor vehicle fleet. More to the point, it makes it difficult for us to become very early implementers of new initiatives but, in the longer term, it makes it possible for us to have a substantial impact at the aggregate level.
The RCMP operates over 100 different specified types of civilian and class motor vehicles - more than any other federal organization. The diverse range of vehicles, makes, models and types which we operate is designed to deal with unique operational requirements in the delivery of police services. For instance, our canine and bomb disposal units operate vehicles which are built to very exacting specifications, not unlike our armoured VIP transport vehicles, in order to perform specific duties under often dangerous circumstances.
Again, unlike other federal organizations which typically purchase largely interchangeable vehicles, makes and models, within the categories of passenger or light-duty trucks, RCMP specifications are precisely designed to meet specific operational requirements and cannot be readily interchanged.
This is a substantial issue when it comes to adapting the wholesale change in motor vehicle policy such that envisioned by Bill S-7. In other words, our ability to simply substitute an OEM or converted alternative fuel vehicle for a specific police vehicle is severely limited by both the operational duties of the vehicle and the capability of the marketplace.
It is our firm position that the unique nature of the RCMP's role in delivering police services, together with the specialized form and function of our police vehicles, does not constitute a legitimate excuse on our part to undertake anything less than our full responsibility for sound environmental practices. On the contrary, our role as Canada's leading police service agency is to provide both leadership and an example in all areas relating to professional standards and best practices.
To date, our motor vehicle procurement operations and maintenance procedures are consistent with life cycle material management practices as well as the guidelines published in the fleet wide series of government publications.
Further, our new fleet management contract, scheduled to be awarded later this month, will greatly improve our national data base of information on vehicle operation, costs and other performance indicators, enabling us to more effectively and efficiently manage our motor vehicle resources. Of particular interest to the members of this committee is that our ongoing strategy to adopt alternative fuel vehicles, together with our forthcoming comprehensive policy in this area, will soon begin to produce tangible and meaningful progress.
Once we have completed defining our operational and cost effective criteria to be contained in a new policy, the job of determining which of our vehicles will be most suitable for either conversion or replacement by alternative fuel vehicles will begin to take effect immediately.
I am pleased to report that the RCMP has made good progress during the past year in our effort to enhance the use of environmentally responsible practices in our management of motor vehicle resources. At present, we have completed our assessment of the bill, its implications within the RCMP, as well as our contract policing clients. In addition, the process of consultation with divisions, detachment level fleet managers has begun, with respect to the bill and its requirements.
A number of outstanding issues remain to be resolved. We are confident that these can be dealt with in a timely and expedient manner.
[Translation]
We studied the possibility of reducing our fleet. We are planning on reducing it by 10 per cent, representing some 800 vehicles, over the course of the next three to five years.
An RCMP internal committee is looking into future transportation possibilities for members. The vehicles used will be smaller. As we all know, GM, Ford and Chrysler are reducing the size of the cars they are building and the larger vehicles that we have today, such as the Crown Victoria and the Caprice, will no longer be in the picture in the next century.
We are planning on buying smaller vehicles and we are looking at ways for us to adjust while not compromising our efficiency.
[English]
Within the past year, a number of experimental pilot projects have begun involving the use of alternative fuel vehicles and converted gasoline vehicles by OEM. As part of our project aimed at assessing the operational capabilities of these vehicles and the fuel source, we presently have 24 alternative fuel vehicles in the lower mainland of British Columbia which are either propane or natural gas. Lessons learned during these trials will form a large part of our overall strategy and policy with respect to complying to the bill.
As indicated on previous slides, we have already begun the process of reducing our motor vehicle fleet size by 10 per cent during the next three to five years. This process is already under way and will continue during the months to come. Also in the coming months, we will undertake a process of consultation with our alternative fuel industry, other federal departments, other police agencies across Canada, and our contracting police clients, aimed at advancing the implementation of the alternative fuels.
Our consultation with the industry will, hopefully, lead to wider availability of alternative fuels, as well as improved performance data. Our consultation with our clients will focus on gaining their support for and commitment to this initiative. As Canada's leading police agency, the RCMP creates many of the standard police package specifications for motor vehicles in this country. Our consultation with other police forces will focus on establishing critical mass in this area, hopefully leading to increased demand for OEM alternative fuel vehicles as well as fuel supply and availability.
We also play an active role on the NAFA, which is the North American Fleet Advisory Committee. Every law enforcement agency participates in it.
Based on the outcome of our pilot projects and prototyping effort, we anticipate that the new alternative fuel policy and implementation criteria for police vehicles will be completed by the end of the fiscal year.
Working with the new "Q" Tool, which is currently being developed, we will soon be in a position to compare and analyze the resulting data from our pilot projects and consultation. It is certain that the arrival of this much anticipated new software system will greatly facilitate our efforts in this area. This software is with the committee on alternative fuel over which Natural Resources Canada, the Treasury Board Secretariat and Environment Canada presides. We are part of that committee.
Based on the premise that no internal requisition for replacement of vehicles will be processed by the RCMP without a full and complete application of the alternative fuel criteria, our new policy will begin to take effect April, 1997. We say 1997 because by January of 1997 we want to have the criteria in place and a draft of the policy for the whole force across Canada.
Our short-term strategy also calls for the development and implementation of a communication plan with our detachments, divisions, contract policing clients and our other aims are raising awareness, promoting the use of alternative fuel and exchanging best practices.
In the medium- to long-term we will have to establish both formal and informal reporting procedures on all aspects of alternative fuel vehicles used within the RCMP, as well as comparative information on remaining conventional fuel vehicles. In addition, we anticipate that our alternative fuel criteria and policy will require an ongoing refinement in order to facilitate further alternative fuel use. As the realities of the marketplace evolve in response to growing demands, there will be a greater choice of alternative fuel vehicles available and likely fewer performance penalties as a result of advance in technology.
In the medium term, the RCMP will of course continue to acquire alternative fuel vehicles in compliance with the act and the corresponding timetables.
Further we will continue to enhance the organization of our fleet resources through a continuous improvement program focusing on optimized operational requirements, the principle of environmental stewardship, and the most economic use possible of our available financial resources.
We anticipate the achievement of certain specific results coming directly from these efforts. In the short term, our efforts define an appropriate policy, and a set of alternative fuel selection criteria will enable the RCMP to establish a comprehensive picture of our available alternative fuel candidates within the exiting fleet.
We also anticipate being able to fully identify the most appropriate OEM and conversion option through application of our policy and close work with our colleagues in divisions and detachments across the force. In the medium- to long-term framework, we anticipate a fuller realization of our efforts aimed at developing sound policies and criteria, and within this framework we are confident that the RCMP will be in compliance with the legislation to the fullest extent possible.
We also see growing numbers of OEM alternative fuel vehicles with warranty approved conversions service being made available as a result of our communication and consultation efforts with the industry. Accompanying this, we further see greater availability of alternative fuel and associated services within our patrol areas. In partnership with our provincial and municipal contracting police clients, we will seek to expand on our client-base partnerships in areas relating to the use of shared resources, facilities and opportunities in areas to the benefit of increased demands and cooperation with other police agencies across Canada.
On behalf of the RCMP it has been a pleasure for us to have had this opportunity to present to you our strategy with respect to Bill S-7. If you have any questions, we will be glad to answer them.
The Chairman: Mr. Dupuis, when you contract out to municipalities and the like, do they have some say over the vehicles you will use?
Mr. Dupuis: Yes, they do, sir. The vehicle is split into two costs. There is the 70 per cent that we have to recover from them. We have a contract with the municipality in the province of the area we serve. They pay 70 per cent of the cost of that vehicle and the federal budget pays 30 per cent.
For example, in Newfoundland it was decided not to put new vehicles on the road at this moment because of the extra cost. If we were to put new vehicles, alternative fuel vehicles, on the road they would not accept them at the moment because there is no cost recovery there for their taxes. They want us to keep our vehicles on the road longer. We also go to 160,000 kilometres. Now they want us to drive them for a longer period because nowadays vehicles are built better and they are saying the engines should last longer.
The Chairman: If you were able to illustrate to them that your vehicle use would be cheaper not only in terms of fuel, but in terms of longevity of the vehicle, would that not assist your discussions with them?
Mr. Dupuis: Yes, it would, Mr. Chairman. What we want to do is built up our criteria, our policy. We are having a conference in two weeks with our people across the force to discuss this bill and where we are going. We also have to discuss with our clients, the provinces and the municipalities, the long-term cost implications for them. At the moment I know it costs $7,000 to $8,000 more for a natural gas vehicle, specifically, Crown Victorias. We want to explain to them that, although the immediate cost may be high, in the long term we will all be saving.
The Chairman: In a sense, a selling job has to be done at the provincial and municipal levels in order to persuade them of the value of this process.
Mr. Dupuis: That is correct, sir, and this is one of the reasons why we are seen to be dragging our heels, our spurs in the ground, but we are not. With all due respect, as we said in our last presentation, we want to move in a positive direction on this. We fully support it. This is a selling job for us because we are not concentrated in one area.
Senator Spivak: I note that your criterion for purchasing alternative fuel vehicles is that they have to be operationally feasible and use an economical alternative fuel. Am I correct in assuming that it is the infrastructure which is the hurdle more than the acquisition of these vehicles because you can buy specially made vehicles which use alternative fuel? Is the infrastructure is the biggest hurdle that you have to overcome?
Mr. Dupuis: One factor is the infrastructure, yes, and that is because of some of the remote areas in which we operate. Where we can have concentration, is the lower mainland of British Columbia. Presently our main focus is on B.C. and here in Ottawa where we the facilities are in place and there is the availability of 24-hour service. We do not have refill stations in our garages because we contract a lot of our services out.
We partake in the Michigan State trials every year. Last year, highway patrol vehicles, which are away from the city core, were rated on performance. In that instance, distance between places where they can refill their vehicles is a factor. We would like some of these vehicles to be exempted. They do not constitute a great number of our vehicles. When a request for a alternative fuel vehicle is made, we will assess whether it can be operated in a particular area.
Senator Spivak: Am I correct is saying that you have 24 different kinds of vehicles and that you will be looking at difference kinds of alternative fuel vehicles?
Mr. Dupuis: Yes, we have many different types of vehicles. As you know, we conduct covert and overt operations. We are not trying to include our unmarked vehicles in this picture at the moment. From discussions I have had with fuel companies, I understand that we are limited in the types of vehicles we can run.
Senator Spivak: I am talking about the test vehicles.
Mr. Dupuis: Yes, we have 24 out there now.
Senator Spivak: Are you contemplating using different kinds of fuels and different makes and models of vehicles? What is emerging from your test studies?
Mr. Don VanDusen, OIC, Fleet Program Administration, Royal Canadian Mounted Police: Presently, we are utilizing 20 test vehicles in the lower mainland. Four are natural gas vehicles and 16 are propane. In the National Capital region we have four propane-powered vehicles. On the West Coast they are marked vehicles. It is either the Ford Crown Victoria or the Chevrolet Caprice. I believe most of them are the Crown Victoria, but I do not have the exact number.
Senator Spivak: Is there any indication as to which way you will go?
Mr. VanDusen: Our decision will be based on the evaluation of the reports that we get back. Our tendency, from an operational perspective, would be to go OEM wherever possible. Unfortunately, at the moment, for marked vehicles, only the Crown Victorias are available. As we proceed through this we hope the manufacturers will come on board and there will be more direct availability of these types of vehicles.
Senator Spivak: The fact that you buy specially made vehicles is an advantage in the sense that you can dictate what you want. You do not have to buy off the rack and convert.
Mr. Dupuis: We can dictate to a certain extent. Last year at the NAFA conference, of all the manufacturers, Chevrolet, Ford and Chrysler, were present. When they underwent a low in production, the police force buys were the bread and butter for these manufacturers. Now they view our requirements as a very small number even though the police law enforcement agency buys about 190,000 vehicles from these manufacturers, and their cars are purchased by taxi companies. Nonetheless, we still have a strong voice. We are meeting with the manufacturers on a one-to-one basis.
We want a cost-benefit analysis from the propane and natural gas companies to see if we should invest money in some infrastructures in areas where we might need to put that in place. Again we have to do a selling job on our clients. All those costs are borne between us and the clients.
Senator Spivak: In making a choice, you are considering what is operationally feasible and what is economically good for you, but are you also analyzing the emissions of the various fuels so that you can participate in reducing emissions according to the international obligations Canada has relating to climactic change?
Mr. Dupuis: Yes, senator. Our goal is to achieve environmentally clean air.
Senator Spivak: Are you aware of your obligations in that regard?
Mr. Dupuis: One of the reasons we want to work closely with the gas companies and the manufacturers is because, unlike some of the smaller police forces, we do not have a central area where we have our own mechanics and our own fuelling stations. We have to outsource those, and the facilities we use might not have the technology to ensure proper emissions. We want to ensure that is done. If it is an OEM manufactured vehicle, they will have to comply with computer read outs.
Senator Kenny: I found the presentation you made today significantly more enlightening than the presentation we heard last time. Maybe some of those spurs are coming out of the ground; I do not know.
You made reference to contract provinces and how you have to take their concerns into account. Having said that, it is my impression, perhaps incorrectly, that you can also veto what is going on in a contract province, and that there have been detachments which wanted to order natural gas powered Crown Victorias and that Ottawa said no. Is that the case?
Mr. Dupuis: I do not believe that was the answer. As was explained in our last presentation two months ago, a subcommittee was created from the fleet management of treasury board, and we had asked NRCan, Environment and treasury board to chair that committee. Because we are spread across Canada, we did not want the fuel companies to go to all 700 detachments and talk to all the different people out there without knowing what our infrastructure was going to be and what our plan was.
That subcommittee was asked to ensure that we would get reports from all the other departments as well as information on the types of vehicles we are piloting. We were to speak to the manufacturers of fuel and try to get the industry OEMs on side so that we could have a bigger voice, if you will, instead of one department trying to deal with it individually, in which case you would have 30 departments trying to talk to the industry and to the fuel companies. That is where we were going.
Senator Kenny: It sounds as if you are confirming my assumption that you have cancelled orders commanding detachments have made. It seems to me that, if someone running a detachment is interested in buying these vehicles, that officer must have a pretty good idea of what sort of infrastructure is in the area. It seems strange that some fellow in Ottawa should decide that they have a better idea of the infrastructure than the local commander.
Mr. Boire: It may come across as trying to stifle some innovative practices, and that is unfortunate, but it is not that we are trying to discourage it, we want to make sure that we have got the appropriate set of criteria developed and in place so that we can measure the effectiveness and efficiency of these things. In many areas of the force, detachment commanders will often come in with suggestions, and we try to be as encouraging as possible, whatever the issue. When there are financial implications, we want to go forward with a plan that will have a common denominator for measuring what was done, what was purchased, what was on the vehicle, and different types of questions like that. They have to be satisfied so that, at the end of the exercise, we have a meaningful plan.
Sometimes people in an area will look at themselves in isolation, and maybe the initial negative response comes across as being disruptive to what they want to do, but that is not the case. We are trying to do our homework properly to make sure, as we go forward, we are going forward on a common front throughout the organization.
Senator Kenny: You said you had 8,000 vehicles in the force?
Mr. Boire: Thee are 5,300 cars, plus some other vehicles.
Senator Kenny: Is there a total of 8,000 vehicles?
Mr. Boire: Yes, counting the planes, the ATVs, and other vehicles.
Senator Kenny: How many of these currently are on alternative fuel?
Mr. Dupuis: There are 24.
Senator Kenny: That is 24 out of 5,300. How many new vehicles do you plan to purchase this year?
Mr. VanDusen: We plan to purchase 1,671.
Senator Kenny: How many of those do you anticipate will be powered by alternative fuel?
Mr. VanDusen: I believe, 10, sir. They will be part of the pilot.
Senator Kenny: Do you have a mechanism for keeping track of the mileage and fuel used for each vehicle?
Mr. Dupuis: We have an RFP at the moment, sir, who will be finished by the end of the week. As you know, we had to outsource this service because common service agencies no longer provide that service and, within that service, they will be giving us measures of types of alternative fuels, the mileage, and the life cycle of the vehicle.
Senator Kenny: Are you telling us that, up to now, you have not known how many litres each vehicle has used, how far it has been driven, and what the life cycle cost has been?
Mr. Dupuis: We have that information. We do not have the information on the alternative, because most companies did not capture propane or natural gas on the chits for us to put that in our data bank.
Senator Kenny: You have captured it for gasoline?
Mr. Dupuis: Yes.
Senator Kenny: Do you know the number of litres you have used on each of your vehicles in the fleet?
Mr. Dupuis: Yes, sir.
Senator Kenny: When Assistant Commissioner Richter appeared before us on the April 30, he said that refuelling infrastructure was currently either very sparse or non-existent. Those were his words. What percentage of RCMP vehicles have access to propane today?
Mr. Dupuis: I could not give you that figure, sir. We are surveying that with the propane and the natural gas companies to assess the infrastructure and availability.
Senator Kenny: Are you familiar with the Bronson report?
Mr. Dupuis: Yes, sir.
Senator Kenny: Are you aware that that report states that 96 per cent of the federal fleet has access to propane?
Mr. Dupuis: Yes, sir.
Senator Kenny: By my calculation, based on a 39,000 fleet, you make up 20 per cent of the fleet. I think the size of fleet you used to arrive at your percentage was a smaller fleet which, perhaps, did not include Crown corporations. If 96 per cent of the fleet has access to propane, it seems to me that a lot of RCMP vehicles have access to propane.
Mr. Dupuis: I could not tell you the number, sir, at this time. I know of the study by the Bronson group, and I am also aware that they have been rehired by treasury board to do another study, because some of the figures that they captured from the data bank was not accurate.
Senator Kenny: Are you saying that we should not believe that 96 per cent figure?
Mr. Dupuis: This is one of the reasons that we want to look at our whole infrastructure, sir.
Senator Kenny: How often do your vehicles run out of gasoline?
Mr. VanDusen: I really could not tell you, but I am sure we would have heard of it if it had.
Senator Kenny: As far as you are concerned, it has never happened.
Mr. VanDusen: It has never happened as far as we know.
Senator Kenny: When you open a detachment in a new area, and the vehicles use gasoline, and the local gas station is only open eight hours a day, what do you do?
Mr. VanDusen: In remote areas we have historically made arrangements for bulk fuel capability.
Senator Kenny: Do you go to a fuel supplier and ask them to set up a fuelling depot for your use?
Mr. VanDusen: Exactly.
Senator Kenny: Have you ever done that with an alternative fuel supplier?
Mr. VanDusen: Not to my knowledge, sir.
Senator Kenny: Why not?
Mr. Dupuis: What we have done, sir, is partnered with the municipality, the city, where they have a bulk fuelling station. Some of the areas where we are located are not our properties and we cannot put an infrastructure there unless we reach a consensus with the landlord.
Senator Kenny: How about in the areas where you know that there are a lot of alternative fuel stations? I am sure you know there are many propane stations here and in the London area. Do you operate with a credit card system?
Mr. Dupuis: Yes, we do, sir.
Senator Kenny: What problems do you run into in that regard? I asked the people from the London Police Department what would happen if the RCMP detachment asked to refuel at their spot, and I was told that if you had a credit card there would be no problem. You would be served just like anyone else.
You come to this committee and tell us about the problems, the difficult areas, and how complicated it is to deal provinces and municipalities. However, you make no mention of the fair sized fleets in areas where it is obvious to all of us that there is a terrific infrastructure and how you are moving to capture those opportunities. Why is that the case?
Mr. Boire: I think the gist of our presentation was an acknowledgement that we did not get off the mark as quickly as some people would have liked. However, in recent times we have made a commitment to move forward with this initiative. I plan to put in place a system by January 1 where the purchase of every new vehicle will have to go through a process of satisfying this criteria of why the vehicle can or cannot be purchased under one of these alternative fuel programs. It is not in place now, but it will be.
Senator Kirby: Can you describe the evaluation process for us? As someone who has run evaluation processes, I know that it is not too difficult to get the answer you are looking for. What is the evaluation process?
Mr. Dupuis: We are meeting with all of our divisions across Canada at a conference on June 23. We want to build up the criteria, but also, as I mentioned, we have an RFP right now with outsourcing of all of our fleet services and the credit card system. We want to ensure that these companies tell us they can capture the information on alternative fuel and that they will feed into that software system all the information for requests for vehicles, whether a new vehicle or a leased vehicle. Through that, we hope to establish criteria which, as you say, should not be difficult. However, we have to inform our people how we are doing this and of the policy for that.
Senator Kirby: Am I correct that in terms of what is referred to in your presentation as "alternative fuels, feasibility analysis," the steps of that analysis have not yet been established?
Mr. Dupuis: We have already identified some.
Senator Kirby: Have you not yet locked in a specific system for carrying out the evaluation?
Mr. Dupuis: There is a new system called "Q" Tools which treasury board is piloting with other departments right now.
Senator Kirby: Is the answer "no"?
Mr. Dupuis: We have not seen it yet, sir.
Senator Kirby: My next question comes back to the comment made about not wanting one division - using the example Senator Kenny raised - to do something that was not part of a national policy. The words you used were "common front." I think "national policy" sounds a bit better. I am surprised to hear that the RCMP operates under a system that is much less national than any other federal organization, for all the reasons you say. You are contracted out to municipalities, to provinces. Of all the federal departments for whom a common front does not make a lot of sense, you are the prime example, and that is precisely for all the reasons you have already described. If a division commander comes in and says, "Here is an idea which we think is efficient, and by the way, the fuel supply is available" - because I do not believe a division commander would suggest that was not the case, why do you impose the condition of a common front on an organization which does not have a common front in most of its operation?
Mr. Boire: While we are on contract to provinces and municipalities, we are still a national police organization, and there are still those ties to the central part of the organization. In any type of policing matter, whether it is the operational side or the administrative side, there is usually a central policy developed with respect to different applications. They are not on their own, if that is what you are suggesting.
Senator Kirby: No, I am suggesting something marginally different from that. Having been a deputy minister, I understand administrative policies are generally made for the ease of the administrator rather than for the ease of the purpose of the person being served by the policy. Historically that has generally been true. It seems totally unrealistic that a commander could not act on his own. It seems to me that, if someone says, "Here is something which is economically and environmentally an improvement and which is available," to say to that individual running a particular division, "You cannot do that because the rest of the country has not caught up with you," or "We at headquarters have not developed a national policy," strikes me as not a terribly logical response. In my mind, it is an attempt to slow the process down for whatever reasons I do not quite understand. It does not strike me as an attempt to promote the spirit of the legislation. I am puzzled that you would say "No," as opposed to saying, at the very least, "We will run it as a pilot program." I am surprised that, if there is some creativity being shown, you would not encourage it. That is consistent with the spirit of what the legislation was designed to do, whereas the administrator's response, in my mind, runs absolutely counter to the spirit of the legislation.
Mr. Boire: I am not familiar with the complete circumstances of the case you are referring to, or the nature of it. To follow up on my previous comments, we do have a pilot project. I do not think the response was a "No"; but it could have been a deferred "No." Of course, we want to go along, but from a national perspective we want to know what is going on so we can measure it and ensure ourselves that there is that element of cost effectiveness, that environmental concerns have been addressed, and that we do not have every individual in 700 detachments in the force all doing his own thing without us knowing what that will bring about in the final result.
Particularly during a pilot project, you need a system to monitor what is happening, the pluses and the minuses, and to be able to assess that. If we were to respond to each request that comes in without some kind of a guideline, even if it is not a policy, we would not be able to report back on the successes and failures of this program.
Senator Kenny: These folks were already using alternative fuels. They had experience with it. It was before the pilot project ever started. More to the point, there seems to be an effort on the part of the force to want to reinvent the wheel. The London Police Department has been using alternative fuel for a long time. Have you ever sat down with Gar Irwin at the London headquarters and asked him to tell you all about this?
Mr. Boire: Their presentation was news to me this morning. I was not aware of their progress in this area.
Senator Kenny: That is my point. It is not news to the officer who runs the detachment in London, and it is not news to the people who operate in the Niagara area. There are people in the field who know a fair bit about this.
Have you ever driven a propane-powered police vehicle?
Mr. Boire: No, I have not.
Senator Kenny: I cannot understand is why RCMP headquarters wants to start at square one and work through the whole process as if the police community in Canada had no experience of any value. I cannot understand why you would want to develop your own standards and your own specs, when you can borrow them. They will give them to you, and you can assess whether they suit your applications or not. The bill itself calls for flexibility, and in fact it calls for different fuels to be used at different locations, whatever makes most sense economically or operationally. Certainly, we imagined different fuels would be used all over the country, depending on what made most sense in the local area.
We asked the previous witness panel to make their presentation before you because we thought it might be useful for you to hear what these people had to say. You heard a fairly balanced presentation. They talked about their successes and failures and admitted that some applications seemed to work pretty well and some did not. They are both certainly saving money. They both said they had a fairly high level of customer satisfaction, and the work their constables do is not very different from the work your constables do when it comes to patrol work or regular policing work.
Mr. Dupuis: If I may, sir, as recently as May, unknown to Chief Superintendent Boire, we visited a complex in Peel. Our Canadian contingent of the NAFA met there, and all Canadian law enforcement people sat together and discussed their applications. The Peel police force made a presentation to us about availability, and again they have their own fill-up station, their own garage. Vehicles come in and out of there during the day. If a difficulty arises with one vehicle, they have an exchange vehicle available.
We are not telling our detachments not to do this and, if that is the case, I am unaware of it. Quite simply, we want to do this nationally so that everybody across the force will understand the process, how it is to be done, and we want to hear about successes out there from our detachments if some of them are going ahead.
Some from the lower mainland have gone out and done their own conversions. We are awaiting a report from them. As Chief Superintendent Boire tried to explain, we need to know what the advantages and disadvantages are so that we can meet with the industry and ask for OEM vehicles, not just conversions.
One of the points I would like to make, and this was discussed at the last meeting, the OEM manufacturers are changing the computerized system on the vehicles for 1997-1998, which will have another effect on alternative fuel conversions. We have met with the engineers on that and we will meet with them again next week. We want to know what impact that will have on our vehicles because, if a member is driving down the road and the vehicle indicates that there are engine problems, because the computer system will not recognize the conversion if it is not a manufactured one, our member will assume that the car has something wrong with it and it will be towed and the garage will tell us that there is nothing wrong with it. We are working very closely with them on that.
Senator Kenny: Do you not think the London police have faced that type of problem and have come up with a way to deal with it?
On the subject of the OEMs, you will have a long wait if you wait for all the OEMs to come out. Surely the bridging strategy surely is to do conversions. We have evidence from some of your folk who have dual fuel vehicles indicating that they can drive incredible distances when they can combine gas and propane. If you put all your eggs in the basket of OEMs, we will be holding these hearings for a long, long time.
Mr. Dupuis: We would invite you, Senator Kenny, to visit one of our locations where we are conducting this pilot project, and there we will be able to show you what is going on.
Senator Kenny: I would like to do that.
Senator Spivak: Senator Kirby talked about evaluation. Actually the objective of this exercise is not only to assess its economic viability because, in that regard, you could take many different routes. In your evaluation of alternative fuels, will you also assess the quality and quantity of emissions so that you will know the environmental impacts of each kind of fuel?
Mr. Dupuis: This is what we hope to achieve, yes. In the British Columbia they have the Aircare program, so we want to ensure that emissions are monitored.
Senator Spivak: Is that part of your new software program?
Mr. Dupuis: The "Q" Tool, from what I understand, should assist us in this regard. The RFP we have out there now from the fleet companies have employees who, although they are now in the private sector, have spent some time in government experimenting with and capturing much of this data.
The Chairman: Chief Superintendent, I sense a resistance on the part of the force to make this transition on the basis of what might be called "experimentation." However, I would point that it has been proven to be environmentally clean and that there are all kinds of economic advantages. This is not a new area. Is it the bureaucracy in the force that is resisting this? I do not understand the delay in undertaking what seems to me to be a very obvious transition that should be made. Am I being unfair?
Mr. Boire: I do not think there is an unwillingness on the part of the RCMP to go down this road. We are committed to going forward. Unfortunately maybe our speed has not been what some would have liked to see, and we are trying to correct that. Perhaps there has been reluctance in certain areas. When you are dealing with an organization of our size, from the Atlantic to the Pacific, you have to deal with many different personalities. Some people are very enthusiastic to go forward; and others may be reluctant to move from the tried and true method. It is a combination of factors.
However, from the corporate headquarters point of view, the force is very sincere in wanting to move forward, we are committed to exploring how we can implement this more quickly.
Senator Taylor: You mentioned that you contract out your services. Is there ever any pressure from the clients to buy your fuel from certain businesses? When you are retained by a town, are you told to refuel at certain stations that may or may not be tied in with the local town council?
Mr. Dupuis: Generally, we try to put as many dollars back into that community. We are there on contract. We try to promote the community-based atmosphere. However, we are not generally told where to refuel but, in the smaller locations where we are restricted, we have to fuel there.
Senator Taylor: Small towns might have five service stations but only one LPG or propane facility. Is that a deterrent? I know from experience with provincial politics, that the mountie was always expected to spread his largesse around, but you cannot do that when there are only one or two LPG stations.
Mr. Dupuis: It could be serious if only one out of five could service us.
Senator Taylor: When representatives from the propane and other gas companies appeared before us, I had the impression that they would be quite happy if we were to legislate the use of their products, thereby forcing people to buy them. Have you ever considered asking these suppliers of alternative fuels to provide you with one or two equipped vehicles? After all it would an advertising benefit to them. You are a huge buyer. I cannot imagine any other user of so many vehicles not asking these fuel companies for a new vehicle to test.
Mr. Dupuis: In British Columbia we did receive one on loan for a trial. It was a Crown Victoria which ran on natural gas. The trial lasted for about two or three weeks.
I would point out that if they did provide us with a vehicle, we would have to drill holes in it to install our communications equipment and wiring.
Senator Taylor: You will not be able to sell it to a taxi company.
Mr. Dupuis: I wonder if they would be willing to lose that money in a sense. We do have an unmarked car on loan.
Senator Taylor: Senator Kenny mentioned that 96 per cent of the fleet has access to propane. As a person who drives a motor home occasionally across this country, I know that you often come across the small gas station at the edge of town that is open only on week days, so I know that it is not always available.
Senator Kenny: We have your new report. Is it intended to replace the report we received before, or do you still stand by this report and with what we heard from Assistant Commissioner Richter? It seems that what we heard today is a little different from what we heard last time.
Mr. Dupuis: It is, sir. We are going to be more positive, naturally. We are now very positive about moving forward and, as Chief Superintendent Boire and I said before, we want to ensure that the bill is complied with within the force, and we are the leaders of the police force.
Senator Adams: How many kilometres must be on your vehicles before they are traded in?
Mr. VanDusen: We normally keep the unmarked vehicles at approximately 130,000 kilometres.
Senator Adams: What is the maximum life of one of your vehicles before it is replaced?
Mr. VanDusen: They are renewed anywhere between three to four years.
Senator Adams: Most northern communities are now serviced with scheduled flights and charters, but the RCMP still use small aircraft such as Twin Otters. What are the fuel costs and other costs which you pay each year to operate a Twin Otter?
Mr. Boire: The planes are still used for policing matters as well as for transporting prisoners. Quite often the commercial airlines will not take them.
Mr. Dupuis: On the question of fuel costs, we have reduced our air services. As a matter of fact, in the Newfoundland area we have reduced down to two helicopters and one plane. We only have one Twin Otter Beaver that brings the prisoners from Labrador to St. John's, to the mainland. That is their primary usage. The same situation applies to our aircraft out west.
Senator Adams: In the old days when the RCMP had to transport somebody to a jail they would use a sled. Now, the RCMP fly into the communities, pick up prisoners, and take them to the prison in Yellowknife or somewhere else.
You are using a plane such as a Twin Otter for 12 months of the year, and paying salaries to pilots and any other staff, and my concern is that the money spent on gasoline for the plane might be used to purchase new cars.
Senator Kirby: When your analysis system is developed to the point that you have your alternative fuels feasibility analysis, which is the analysis you will do before deciding what vehicles to buy, would you let us see the analysis pro forma? I would like to have some understanding of the analysis process you undertook.
Mr. Dupuis: Yes, we will, sir.
The Chairman: Gentlemen, thank you very much. We look forward to seeing you again in October. We look forward to your continued progress in this area.
Mr. Yarnell, welcome back. We are ready for your presentation. What is the topic you wish to address today, sir?
Mr. Robert Yarnell, Director, Corporate Affairs, Superior Propane Inc.: I will to spend some time this morning bringing you up to date on the propane industry's work, that of Superior Propane, and some other work that applies to our industry as it relates to the development of propane in Canada.
Before we start, I just want to address a point raised in the RCMP presentation by using a slide which illustrates the back of a Crown Victoria. This shows a 105-litre capacity tank installed in a dual fuel application. The type of application that the London police force uses, as was stated, has the tank underneath, so that the space that this tank takes under the back of the window is not taken.
The hose assembly is the piping that eventually connects to the refuelling connection, and the issue of any vapours or valves is addressed in the installation of this type of a tank by a vapour seal. There is aluminum casing that fits over all the valves on the tank, so should any vapour escape from that valve or that area, it is then exhausted to the outside. There would be no accumulation in an enclosed space using this installation.
Senator Taylor: Would you care to comment on the fact that they store their vehicles in underground garages with impunity? Does that concern you?
Mr. Yarnell: Underground parking and the restriction of these vehicles stems from old practices that did not include this type of venting. This equipment design was not in place. There is now what is called an "80 per cent stop-fill valve." The people who deal with provincial codes and regulations across the country have acknowledged that the likelihood of vapour escaping and creating an issue is negligible and does not warrant any consideration when it comes to rules pertaining to underground parking or similar types of rules.
This particular installation, as well, would have an 80 per cent stop-fill. That means that when the tank is 80 per cent full, which is the legal limit that you can fill a propane tank to, then the refuelling process stops automatically. In the old days, a tank would be refilled by somebody at the site and they would stop when a valve began to spit liquid propane out of the tank. Sometimes the operator would then round it up to the nearest dollar, or whatever, thereby putting more than 80 per cent of the volume into the tank and creating the possibility that, if that refuelling process had been done in the cold, and then the vehicle was moved to a warm environment, there would be an expansion of the fluid and the vapour in the tank, and a risk that it would then over-pressure.
From a technical point of view the issue of overfilling a tank has been addressed with the stop-fill valve, and from a vapour-escaping point of view when tanks are installed in an enclosed space such as this, the vapour seal system is a requirement and eliminates that concern.
I want to take a minute to review two slides from the presentation made a year ago, to provide a context for the propane business and the auto propane business in Canada.
Eighty per cent of Canada's propane is produced as a co-product of the production of natural gas. Approximately 9 billion litres a year are produced, 3 billion of which are used in Canada, and 6 billion litres are exported into the United States and are generally used as a petrochemical feedstock.
Propane is also produced in refineries. As a refinery fuel, it is generally not the type of propane we like to buy because it can contain other molecules that are not always desirable in an automobile. Propane is transported from its production sites in the west through pipelines, and by railroads and truck fleets, and then it is handled by marketing companies such as Superior, ICG, and about 80 other propane marketing businesses across the country.
The auto propane business in Canada sees 1.3 billion litres a year of propane sold to fuel 150,000 vehicles. That is roughly 8,600 litres of propane per vehicle per year.
Senator Spivak: What is its percentage of the fuels market?
Mr. Yarnell: Propane is around 2.5 per cent of the transportation energy demand consumed by about 1 per cent of the vehicle population. It is skewed towards higher consuming vehicles.
Auto propane has developed, by way of fuel attributes, its supply and infrastructure properties, vehicle availability through OEM, and certified conversions as well as life cycle performance characteristics. These three elements, in our view, lead to an ongoing cycle of satisfaction in the 150,000 vehicles that use propane today, and we work, in the business, to see that this cycle continues, because it does not work as soon as one part of it fails to deliver.
With specific reference to Bill S-7, I will touch on what has happened in the last year. We have been in close contact with NR Canada as the lead department in implementing action on Bill S-7, specifically the demonstration project they have initiated. We have also worked with Canada Post on some work that they have done on vehicles.
Through 1995 our investment in capital in auto propane sites and projects was about $570,000. In addition, we have incurred about $400,000 of installation costs, soft costs, and, as part of our ongoing maintenance program, we spent approximately $3 million on maintenance of the 2,000 dispensers that are within our scope.
The industry undertook some significant work in British Columbia through the year as a result of work that was done by the propane and natural gas industries in B.C. In 1994, the B.C. environment ministry caused formation of a task force to address conversion emissions standards. They had seen through their aircare work that the performance of some alternative fuels, propane and natural gas, was less than they expected, and wanted the industry to jointly work to resolve those concerns.
That was completed in September of 1995 and then was further developed by the propane industry by implementing a number of memoranda of understanding among the equipment manufacturers, distributors, conversion dealers and fuel suppliers. The goal, through this process, was to bring together an often fragmented business of delivering a vehicle conversion to improve the overall calibre and quality of that work so that the emissions expectations of government and customers would be met.
A key part of the emissions standard was the expectation that conversion kits would be certified as to their emissions performance. This was something that previously was not expected or called for. To facilitate, or to make that certification possible, Superior initiated and led work on a technical development centre that is now located in Concord, just north of Toronto. It is a unique auto propane development centre. It is unique to the propane industry in that its objectives are to design and engineer emissions test conversion configurations. It is outfitted with an IM240 emissions laboratory similar to facilities that test vehicles as a business. The capital cost of over $800,000 was funded by Superior, and the annual operating cost is currently being shared by Superior and ICG.
That development centre, in the course of its work late in 1995, went through the 1995 fleet vehicle platform offerings that were available to fleet customers. All of these platforms have been put through the emissions tests and satisfy the requirements for emissions performance.
Senator Taylor: What is a platform?
Mr. Yarnell: A platform is the frame of the vehicle upon which they may hang different shapes. General Motors products have different bodies they are mounted on a similar platform.
By way of example, currently, OEM platforms that are available to fleet buyers include the platform used by Chrysler in their liquid fuel injection, full-size van. In the 1996 model year there was a two-month window when that vehicle was available, and over 100 were ordered across Canada. The 1997 model year is continuing with that vehicle and we expect strong sales of up to 1,000 units. In the 1998 model year, we expect Chrysler to put that technology into a pickup truck.
Ford has worked on a QVM program for their F-150 pickup truck, and for quite a number of years now, the F-700 has been available as a propane option. Superior and others are also working with various truck and engine manufacturers to deliver propane engines for vehicles such as school buses and lighter duty trucks and for urban types of use where typically diesel engines are being used. We feel there are prospects and opportunities for the displacement of diesel in those urban areas by the use of propane. Work with the engine manufacturers at that level is continuing.
From a success standpoint, by our count, we had 52 federal fleet conversions by the year end, March 31, 1996, and there was probably an equal number by others, which would amount to about 110 conversions. It is estimated that about 10,000 conversions in the industry would have taken place. About one per cent of our activity is with the federal fleet.
We will go over a few points relating to barriers and the types of experiences we have seen, and some of the steps that we will be taking in the near future. Auto propane barriers to further development fall into two general groups: Federal fleet barriers; and general industry barriers. There are three key factors on the federal fleet side: the age of the fleet, the fleet organization or structure, and what I have called "government purchasing practices." General barriers are auto propane premium and vehicle availability.
Within the federal fleet there are many old vehicles, and it is not a reasonable proposition for us as an alternative fuel supplier to convert a vehicle that has been in operation for two or three years. It will have already accumulated 50,000, 75,000 or more kilometres and if it is converted to run on the alternative fuel anything that then happens to it becomes our problem. That is an inheritance that we would rather not have.
We have been very careful about proceeding with conversions of vehicles that were already in the fleet, and certainly to some extent that would influence the number of vehicles that we have been able to convert to date.
Funding cuts prolong the life of the vehicle, and as fleets are downsizing, a smaller number of new vehicles is being purchased. There are not as many opportunities to go back into the fleet and increase the number of alternative fuel vehicles as I think many might have expected some time ago.
In terms of how the fleet is organized, I guess our experience has been that because it is decentralized and distributed across the country, fleet sizes tend to be smaller. That presents a difficulty in communications and it presents a difficulty in that there are fewer higher consuming vehicles per fleet. I think vehicle pooling between departments will naturally increase the per unit usage, and hence ATF candidates, and it has been confirmed that changing behaviour certainly takes some time.
In terms of purchasing practices in the government, we find that the tender approach or the approach of dividing up the work from the conversions, to the fuel supply, to the service, tends to bring that whole process to a low or the lowest common denominator which is where we do not think it should be. Currently we do not see evidence that, within the purchasing rules that exist, that there is a willingness or interest to try to broaden the view of a package of services that can be applied to alternative fuel vehicle provision.
To that end, our view is that that motor vehicle policy and those practices would tend to ultimately favour an OEM product. I think there is room for what I have termed here a central kind of alternative fuel vehicle acquisition entity or process that includes conversions as well as OEM product.
As to general barriers, market conversions continue to be in the range of $2,500 and sometimes more depending on the amount of under-hood work that needs to be done, and OEM option prices for propane are in the $2,800 to $4,000 range. Fleet managers across the country, whether operating a private or a public fleet, pay attention to their costs, and if it costs them more to put a vehicle on alternative fuel than they see it is worth over the life of the vehicle, they will not do it. Our job on this side is to keep those costs down and, as we move more to OEM sourcing of vehicles, it is our hope that those option prices and premiums will reduce.
In terms of propane vehicle availability, some OEM factory produced product is limited. The Chrysler van is available and there are some product available from Ford. After market product conversions that have been through the development centres emissions process are listed earlier in the presentation, and work at this centre continues on the 1996 model year, although that offering is limited at this time. It is our view that some means or mechanism of having the OEMs cooperate with the after market process would certainly increase the selection and shorten the development time to put a properly certified conversion on the road.
To close, propane continues to evolve. We have been a leader as an alternative fuel in Canada for the last 15 years and that status continues. The federal and provincial governments have always been key supporters of propane, both with grant programs and tax treatments. Greening initiatives, both federal and provincial, will assist growth. Bill S-7 and fleet downsizing will also help.
We expect that public interest and demand will grow as these initiatives continue to deliver the support that is needed to move along.
If you have any questions, I will be happy to answer them.
Senator Kenny: Mr. Yarnell, what percentage of the propane market does your company have in Canada?
Mr. Yarnell: It varies by region, but it is approximately 40 per cent.
Senator Kenny: You listed the success that you had with Bill S-7 to date. I take it that is something less than you were expecting?
Mr. Yarnell: While we did not have a set target because the data that was available to us a year or more ago was limited, we would have hoped for greater success.
Senator Kenny: Do you attribute that to the fact that the regulations are not out yet? Do you expect that, when the regulations are clear, things will quickly change?
Mr. Yarnell: I think the force and effect of the regulations on April 1 will be very significant.
Senator Kenny: All good things come with time.
Mr. Yarnell: Yes.
Senator Kenny: Could you tell us briefly about the range of propane as compared to gasoline in, say, a Crown Victoria. Then could tell us about the range in a dual fuel vehicle?
Mr. Yarnell: The tank that I showed in the slide is a 105 litre, useable volume of propane. That translates to approximately 80 litres of useable gasoline equivalent fuel. A typical conversion factor is 1.3 litres of propane for an equivalent litre of gasoline. The Ford Crown Victoria comes with a 20 gallon or 75 litre gasoline tank. The 105 litre tank is slightly larger in terms of energy content than the gasoline tank that the vehicle is equipped with from the factory.
Seventy-five to 80 litres of fuel will take that vehicle, either gasoline or propane, roughly 500 kilometres. In a dedicated vehicle, either gasoline or propane, you would get a range of slightly more than 500 kilometres out of a tank. In a dual fuel application you will approach 1,000.
Senator Kenny: Do you have police users who are finding dual fuel vehicles useful?
Mr. Yarnell: We have had reports of an RCMP detachment in northern B.C. that uses a dual fuel application to reduce the number of refuelling stops that they need to take on prisoner transport routes.
Senator Kenny: How many refuelling stations are there in Canada for propane, and how does that compare to diesel?
Mr. Yarnell: They are roughly equivalent. Diesel is available at 4,700 odd locations; propane is available at roughly 5,000.
Senator Kenny: So you have any statistics to compare the accident rate or the problem rate with propane or natural gas with gasoline? Are there many explosions?
Mr. Yarnell: No. I do not have any statistics that show the performance of any fuel in that respect. I know that the police forces that we count as customers would not use it as their fuelling choice if they felt it was going to diminish the safety of the officers while they were in the vehicles.
Senator Kenny: Have any of your police customers had safety problems using propane?
Mr. Yarnell: Not that I am aware of.
Senator Kenny: My last question, Mr. Chairman, relates to funding of conversions. When you were here encouraging us to pass the bill through the legislature, you mentioned that you had a program that you would offer to assist with the financing of conversions. Basically, it was a way to deal with the additional initial costs, and then it resulted in a payback over time because of the less expensive price of your fuel. Do you still have a program like that and is it available to government departments?
Mr. Yarnell: The comment that we made a year ago stands.
Senator Kenny: Would you please describe it to the committee again?
Mr. Yarnell: In essence, the concept is that it is for financing the costs of the conversion and then amortizing the cost of that conversion over a period of time. That would be a service we would provide, together with a contract for the provision of fuel and service in a life-cycle approach to the fuel choice for the vehicle.
Senator Kenny: What sort of response have you gotten from the RCMP, for example, when you put that proposition to them?
Mr. Yarnell: None of the federal fleet conversions we have done has been done in that way. They have chosen instead - the departments involved in the demonstration program - to purchase conversions outright and fuel where they see fit.
Senator Kenny: They have chosen to finance it themselves?
Mr. Yarnell: Correct.
Senator Taylor: Why do you not use the cellular phone technique when you are selling propane? The phone is provided free because the supplier knows the purchaser will use it. Could you set up a rebate system whereby, after purchasing so many litres of propane, the buyer would send in his certificate or receipt and he would get so much money back? Eventually the conversion would be paid for by the purchase of propane.
Senator Kenny: They do that anyway.
Mr. Yarnell: I am not quite sure of your question.
Senator Taylor: You are advancing the cash. It does not costing the person anything out of his pocket. However, with a rebate system, if the person uses 10,000 litres of your propane, he will eventually get all his money back. They would put up the money, but they would get their cash back. You are arguing that if they use it, they will recoup the money.
Senator Kenny: The initial offer basically was that they would finance the conversion and the user would pay gasoline prices until he had paid off the cost of the conversion, and then the price would drop down to whatever the price of propane was.
Mr. Yarnell: That was Mr. Munkley's approach to financing.
Senator Kenny: It was not your approach. Mr. Munkley represents the natural gas competition.
Senator Taylor: Cellular phone businesses do quite well using that approach.
Is there any actual difference between propane and natural gas in terms of operation?
Senator Kirby: As a supplementary to your first question, you said that the biggest obstacle to an ordinary citizen converting would be the initial capital outlay. Senator Taylor's question is: Can you, in effect, finance the capital outlay and have them effectively repay you for that capital outlay over a certain period of time by adjusting the price that these particular people would pay for fuel? That way you have the conversion, you have the sales, and the consumer is not out the initial capital outlay.
Mr. Yarnell: Traditionally, the approach we have taken is to take the cost of that conversion and divide it usually by twelve months, 12 equal payments. From an administrative point of view, it is a one-time setup in the credit card system. That is the way it has been managed.
For the federal fleet, I believe the intention was to take it over 24 months.
Senator Kirby: I have two comments. The first is that I understand your response to be that is the way you have traditionally done it. Senator Taylor was suggesting that, perhaps, you ought to think of a non-traditional way. The second is that I am surprised that you offered the government, and I presume other large corporations who can frankly deal with the capital cost problem a lot easier than individuals, a 24-month payout period and only a 12-month payout period to the people who can least afford the initial capital cost. I do not know why you would not offer the 24 months to everybody since that is obviously acceptable.
Mr. Yarnell: Very few of our fleet customers use or ever ask for financing.
Senator Kirby: You offer them a deal knowing they will not take it up.
Mr. Yarnell: Those are your words.
Senator Kirby: I am just making a statement on the basis of what you said. It does seem to me, however, that if you are prepared to offer that to big users you ought to be prepared to offer it to small users because you would not offer it to big users if it was not economically justified from the corporation standpoint. I do not know why you would not do it for small users unless you are concerned that they mighty actually use it.
Mr. Yarnell: Senator, the offer of 24 months to the government was in response to an interest they expressed in having a lengthy term.
Senator Kirby: I think we can easily get consumers to express the same interest.
Senator Taylor: I think that the propane market is not a very aggressive market. You just seem to wait for cherries to fall off the trees rather than going out and encouraging people to convert. I think there are other ways of going about it. Of course, a lawyer will tell you that you can put a lien against a car, if someone who had converted did not use enough litres of propane to make up the cost of conversion. It is not my job to suggest how you should conduct your business. I am sure that every politician, because he or she has had to do a selling job every four years, can think of all sorts of gimmicks.
Is there a difference between propane and natural gas? Are they interchangeable?
Mr. Yarnell: No, natural gas remains a gas. Propane is a liquid when it is in the cylinder in the vehicle. Propane's boiling point is minus 40 celsius; natural gas systems operate at about 3,000 PSI. Propane systems operate at about 100 PSI. The systems are different.
Senator Taylor: Is there a difference between the type of power you get from an engine that is made in the factory and the conversion unit? The conversion of course is all in the carburation. You do not save the gaskets or anything like that. A engine that is produced on the factory floor, will probably get more out of a litre than one that has been converted. What is the percentage of increased performance?
Mr. Yarnell: The current example would be Chrysler's B van which is their full-sized van which runs on a liquid propane fuel injection system. While they have not made any formal statement as to its performance, that particular vehicle is performing and exceeding people's expectations when it comes to fuel economy and engine and vehicle performance. It is working well and certainly it confirms that the OEMs are extremely good at building vehicles. When they set their minds to it, they build very good vehicles. I would rather this was a world full of OEM-produced propane vehicles.
Senator Taylor: They work better.
Mr. Yarnell: We are not there yet.
Senator Taylor: It is my understanding that on May 7 Cummins announced that they had equipped a number of Kenmore trucks so that they could run on propane.
Mr. Yarnell: That is a project of B.C. research.
Senator Taylor: Perhaps the next time you prepare a slide presentation you may want to include a category indicating what Cummins has done.
Mr. Yarnell: The other guys are doing that.
Senator Taylor: You were here when the RCMP made their presentation. Do you not feel exasperated when you see that huge market out there and you cannot do something about it? Have you considered lending them a vehicle or two so that they could try them out? Theirs is a captive market. There is pressure on them to buy propane and you are selling, but nothing is happening. There should be a "marriage of convenience" in that situation.
Mr. Yarnell: We have talked with them. They have detachments that run on propane.
Senator Taylor: You sound like a government representative now. You give them the facts and they can buy or not. You need to give a little push. I get the impression that you want this committee to sell the propane for you.
How does the excise tax apply in this instance? Have you compared the excise tax on propane with the excise tax on a BTU of energy? Is the government overtaxing propane? Do you feel that it would be impossible to do that because people would say that they are buying it for the camp stove and yet put it in the car?
Mr. Yarnell: Sorry, what is your question?
Senator Taylor: There is an excise tax on gasoline. Propane compressed gas for use in a vehicle is priced differently from propane bought for heating. For example, I could take the space heater tank out of my old truck to heat the farm or run a compressor pump. Is the price of propane used for vehicles higher than the price of fuel used for heating? Is there not an excise tax difference?
Mr. Yarnell: There certainly is no excise tax on using propane for heating or running an engine. There is no excise tax.
Senator Taylor: What I am getting at is the yield to the public treasury when you calculate a conversion. Even the Mounties get the excise tax back, too.
Senator Kenny: I think what you are saying is that propane gets a break over gasoline in terms of taxes, and that is true, as does natural gas. The logic would be to phase that out over time.
Senator Taylor: I think that probably the answer is a fuel that is as clean as LNG or compressed gas should not be subject to the polluting or the excise tax because it is does not pollute to the extent that the other does.
Do you intend to make any suggestion down the road that you would pay some excise tax in respect of a conversion in order to help the government to push for conversions?
Ms Pamela Huneault, Superior Propane Inc.: May I respond to that? We consulted with the department of finance and there is no exemption for excise. Excise, by definition, is an exception tax. You can get an exemption to a general tax like the GST, but there is no tax relief per se on excise. It was never intended to be applied to natural gas, methanol, or a percentage of ethanol in blended fuels. There is no tax relief, and there is no forgone revenue for treasury. Excise tax is an exception tax and not a general tax. You only get an exemption to the general tax according to the department of finance tax policy.
Senator Taylor: I was suggesting it is a cleaner fuel and that maybe there should be some sort of an incentive in the price.
Ms Huneault: That occurs at a provincial level.
Senator Taylor: I would be interested if you could give supplementary input to the committee on excise tax.
Ms Huneault: I can give you the opinion from the department of finance.
Senator Adams: Are there any specific models of cars where it costs more to make the changeover from gasoline to propane? I see you have quoted a price of up to $2,800.
Mr. Yarnell: Higher priced conversions tend to involve vehicles that need to have more upgrading of ignition system components, ignition wires, ignition harnesses, some of the electronic equipment. Propane demands more from an ignition system than gasoline, and in vehicles where that ignition system is not strong enough, we need to replace more of those components under the hood. That will increase the cost over a conversion where we do not have to do that.
Senator Adams: Is it relatively easy to make the conversion to a Crown Victoria?
Mr. Yarnell: The Crown Victoria is in an 8-cylinder engine. It is a vehicle of choice by police forces. They consume a lot of fuel and our business is selling fuel. It is the vehicle I guess of choice in that application. Looking ahead, General Motors is discontinuing their production of the Caprice which has traditionally been the Crown Victoria's competitor.
Senator Adams: I think that a private company and individuals should be able to claim the cost of conversion to propane or natural gas from the government because by doing so they are being conscious of the environment. However, perhaps that is something you cannot comment on to because your are in the business of selling this equipment.
Senator Taylor: I think a corporation can write it off against income tax, but as an individual, you cannot write off the conversion.
The Chairman: Thank you very much, Mr. Yarnell, for assisting us today.
The committee adjourned.