March 5, 2021
...Highland is one of many companies that has approached me over the last few years about electric school buses. This particular introduction was through one of our state delegates, David Fraser-Hidalgo, who is very into sustainability and environmental issues. He is the one that first asked for a meeting and brought us together with Highland.
Right from the beginning, they were a class act in my mind. They actually reached out in advance and shared their story and their agenda. I so appreciated that.
We then went to this meeting, and they shared their plan, and everyone started to question if it was possible with the existing funding, because prior to this, nobody thought it was. Everybody thought you had to get a grant or come up with a pot of money to make this work.
So we started looking into it a little bit further. We wanted to make sure that as we were investigating this, we did it in a way that fit with public school procurement, and so fairly quickly we put out an RFI, so that anyone who might have similar ideas could feed us information, that way we weren’t just dealing with one vendor...
...Prior to that, we bought our diesels and financed them over six years, but we didn’t want to go into big debt and take on the cost of electric vehicles right away, so we asked for a lease, we asked for budget-neutral, we asked for design and install, and management of all of the charging pieces. We asked for them to include the electric in the price, and we asked for them to maintain the buses. We actually maintain all of our diesel buses in our five depots, and we have five full automotive shops that run five days a week, and we didn’t want to lose those people.
We asked that they be responsible for the cost of maintenance, but we wanted a contract for us to provide the maintenance service, and that was a way to control the total cost without getting rid of our maintenance tradition...
...And at the same time, we were spending a lot of time scrubbing the contract and worked with an outside counsel group and our own Office of General Counsel. As we were getting close to the end of that project, I felt that we had spent so much time working on the legal aspects, but I didn’t feel that we had done enough analysis of the financial pieces. Someone from our budget office really helped us with that, and there was a very complex financial model that Highland created which we reviewed extensively.
One slip of a formula somewhere could have made millions of dollars of difference over the 16 years of replacing the fleet. I wanted to go to my board with a high degree of confidence and demonstrating that we are going to spend close to the same amount that we spent on diesel buses for the first six years, and then we actually start saving money as compared to using diesel buses.
That is without any grant money. It is not grant-dependent from the school system’s perspective, which is what was important to us in inking this deal.
Highland took on all the risk of that piece. They are hoping for and expecting to get some grants in this proposal that they will be applying for on behalf of them and us, and we have a sharing mechanism for the grants when they come in. They anticipate those grants enabling them to offer continually-better pricing as we move through the entire fleet, which is important. We save directly from a grant, which will accelerate our savings. Enough grants coming in could move the saving point up to year four instead of year seven, for example.
The more grant support on Highland’s end, the more they are able to offer competitive pricing along the way. It is not grant-dependent, but that doesn’t mean we aren’t seeking grants...
...This year we are leasing 25 electrics and buying 113 diesels. Next year, we are leasing 61 electrics, and the rest of our purchase will be diesel. We think it will be around 60. Then from year three on, we are doing nothing but electric, no more diesels, in terms of purchasing. We are going to let each diesel live out its useful life that we have already invested in, while replacing our fleet.
That third year will be the first year of 12 where we replace the entire fleet. Then years 13 and 14 will come back and pick up the diesels that we bought this year and next year. It is over 14 years that we replace all 1,422, and we believe that we can, as the need for maintenance comes down, save maintenance costs in two ways. One is that for each electric bus, we will save half of what we spent on diesel maintenance, and the second, is that we are going to get reimbursed by Highland for continuing our own maintenance...
https://school-busride.com/exclusive-interview-todd-watkins-montgomery-county-public-schools/
