What Are LDCs Doing to Bolster the NGV Market?

Build it and they will come. But for natural gas local distribution companies (LDCs), it takes a lot more than simply building refueling stations to develop a truly successful natural gas vehicle (NGV) program.

During a panel session titled ‘Successful LDC Initiatives’ at the recent North American NGV Conference & Expo in Denver, attendees learned – likely not to their surprise – that building a solid NGV program involves a good deal of collaboration and relationship building, not to mention modern-day business savvy.

“The LDC not only must engage the NGV market – it must be the centerpiece or the core of the market – the quarterback,” said Ronald Gulmi, managing director for Emerald Alternative Energy Solutions Inc., before introducing the four panelists. He added that NGV fleet operators trust their natural gas distributors as a “reliable source of information” on future development for the NGV market – as such, LDCs are in a unique position to educate and inform their customers and, thus, shape the market.

Beyond serving as a source of information, the LDC “is the best avenue for education outreach and market development with vehicle outfitters, dealerships, all the different vendors and trade allies station developers, engineers, equipment service providers,” Gulmi said. “So, no matter the business model – whether the LDC is in the business of building stations or not – they’re in the business of growing the market.”

Gulmi pointed out that most LDCs have “great relationships with their local and state clean safety boards and commissions” and suggested that they make an increased effort to get more of their executives to sit on these boards. LDCs also have “great relationships with the state energy offices and can play a key role in getting state grants and incentive funding,” he added.

Most importantly, Gulmi said, LDCs must have a “dedicated focus on the NGV market.” In order to do this, they must establish an “internal executive champion” – a top-level executive charged with promoting NGV adoption not only via marketing campaigns, but also through collaboration and relationship building.

“If you look at the successful programs over the years – SoCalGas, DTE Energy, KeySpan, Sempra, New Jersey Natural Gas – you know they have an executive champion,” Gulmi said. “So, as an LDC, I would try to enlist the support of your executives.”

Panelist Edwin Harte, clean transportation product manager at Southern California Gas Co. (SoCalGas), one of the country’s largest natural gas distributors serving 12 counties and 21 million customers in Southern California, agreed with Gulmi that it is critical for LDCs to have a dedicated NGV program.

“Whereas many energy companies have their employees working on multiple markets, it is critical to have a dedicated, resourced team that is focused on the NGV market,” Harte said. “It cannot fall under the marketing department or any of the generalized departments, because NGV is a distinct market. Getting that focus is really key. It has to be differentiated from the other markets.”

Harte said SoCalGas currently has about 13 full-time employees focused exclusively on the NGV market. That includes “market development – getting out in front of customers and engaging with them directly; account management – the billing and the interconnection work that needs to take place in the back office; and working with the regulators and advocating on behalf of the market – because, very often the NGV customers don’t have much of a voice.”

Harte also emphasized the importance of educating customers.

“Today’s NGV customers expect their LDCs to be trusted advisors,” he said, echoing Gulmi’s earlier comments. “They expect to get a certain amount of education from the LDCs.”

As such, LDCs need staff in place who can handle this education role, Harte said.

Another major thing an LDC can do to bolster program awareness, Harte said, is get more involved in research and development.

“We are very actively involved in R&D,” he said. “For example, we’re involved in the development of a near-zero NOx emission engine that will be available in the near future. This is an engine that is going to produce NOx at 98 percent lower than the current federal standard.”

However, the degree to which an LDC can engage in R&D largely depends on its budget. Harte said SoCalGas allocates about $1 million annually “for R&D projects just like that.”

Of course, the big, obvious thing LDCs can do to bolster the market is invest in their own fleets and build refueling stations.

“We’ve not only established our own utility fleet – over 1,000 of which operate on natural gas – we’ve also opened up a number of filling stations to the general public,” Harte said. “We now have about 14 public-access stations in Southern California – and we’re rolling out a new branding strategy, giving each station its own clear branding.”

One of the keys to driving consumer adoption in the NGV market is to build stations that are similar to gasoline stations. That’s why, Harte said, SoCalGas “installed canopies with logos and tried to mimic a regular gasoline station as best as we could” at all of its public stations.

“We really thought about it from a consumer’s perspective. In addition to adding canopies to keep customers out of the elements, we also made sure that the dispensers have those nice sway nozzles installed,” he said. “What’s wonderful about that is that when a consumer wants to fuel, you have this gasoline-style holster and nozzle that sways nicely, just like a gasoline station dispenser.”

Landscaping and a lighted sign round out the features that make SoCalGas’ CNG stations look and feel just like regular gasoline stations. And being able to advertise such low prices is a huge plus, he said.

One thing the four panelists all agreed on is that in order to be a successful LDC, one must “walk the walk” – that is to say, the LDC must have its own fleet of NGVs.

Chris Lallier, senior sales representative for CenterPoint Energy, which operates in six states, put it in a corporate-responsibility context: “We believe we should do out part to clean the air we breathe by reducing our carbon footprint and leading the way for other fleets to adopt NGVs with confidence.”

Lee McElrath, regional manager of large accounts for PSNC Energy, a SCANA Company, later added, rhetorically, “If we don’t use our own fuel, how can we expect others to adopt it?”

“If we’re not willing to invest that money ourselves, we can’t expect others to do that,” McElrath said.

So, what are some of the other things LDCs are doing – or can do – to bolster the NGV market? Harte said there are a lot more opportunities for LDCs to educate and inform their customers. For example, in addition to posting a wealth of information on its website, SoCalGas makes use of social media, including Twitter and Facebook, to get the word out about its NGV program.

The company also offers a “CNG station locator” application for smartphones to show users public-access stations in Southern California.

This innovation, however, is not unique to SoCalGas. As Ian Skelton, director of natural gas vehicles for Atlanta Gas Light, an AGL Resources Co., explained, his company also offers an LNG station map that it co-developed with the Municipal Gas Authority of Georgia. This one app, Skelton said, “is probably the single most effective piece of marketing collateral we have.”

Harte also talked about the importance of collecting and disseminating customer testimonials. He said that although it has been rare for utility companies to solicit testimonials from customers in the past, now is a good time to be featuring them, as they provide powerful evidence of the NGV industry’s viability.

In addition, LDCs can develop educational videos that can be featured on YouTube. Harte said SoCalGas has produced six short videos featured on YouTube that cover topics that are of interest to consumers, such as safety, economics and environmental impact.

In addition, SoCalGas is offering workshops on heavy-duty NGVs, where the company brings in fleet owners that have converted to gas. This can be a powerful lobbying tool, Harte said, because when politicians and legislators hear someone talking about the merits of converting, “they really listen.”

In addition, SoCalGas is partnering with Ryder System Inc. to offer NGVs to fleet owners on a trial basis, Harte said. “They get to try out an NGV, kick the tires and drive it,” he explained. “This way, the drivers can understand that it operates just like a diesel vehicle and that fueling is very simple.”

SoCalGas has also developed an iPad accounting app for its account reps that helps them accurately price out NGV programs and pitch them while they’re in the field. “This way, the account rep can sit down with the customer and plug in the numbers that the customer has – and let the customer sort of self-direct their own financial analysis. This is a really powerful tool.”

Perhaps the most common theme among the four panelists, however, was the need for LDCs to create strong partnerships with state and local energy departments and to build cooperative relationships with other key entities in the space.

“We are predominantly focused on identifying and pursuing NGV opportunities within our footprint, including creating key partnerships to develop CNG stations and to create consumer awareness through marketing programs,” Lallier said. “The key to our success is collaboration – because it is through collaboration that we bring successful projects to implementation.”

CenterPoint, for example, is actively involved in the Greater Houston Natural Gas Vehicle Alliance, the Clean Cities initiative, the Texas Railroad Commission and other state agencies. “We also partner to support legislation that creates funding for grants for tax incentives to subsidize fueling conversions and fueling infrastructure,” Lallier added.

All of the guest panelists added that they also, of course, work cooperatively with station developers and customers to ensure NGV projects come to successful fruition.

Photo courtesy of CenterPoint Energy’s website: A CNG-powered company vehicle.