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RFP: 14-0121, Motor and Aviation Fuels TAC Energy Response to Questions 9/24/14

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RFP: 14-0121, Motor and Aviation Fuels TAC Energy Response to Questions 9/24/14 Subject: RFP: 14-0121, Motor and Aviation Fuels TAC Energy Response to questions 9/24/14 1 100 Crescent Court, Suite 1600 Dallas, TX 75201 972.807.7873 www.tacenergy.com 1) The proposed freight model is based on a composite of national transport carrier’s rate schedules. Transport minimum gallons are based on 7,500 for diesel and 8,500 for unleaded gas. Loads with multiple products will be charged on an 8,000 gallon minimum. Less than transport loads will fall under the same minimum gallons as full load or split load transport delivery. Tankwagon freight will vary based on the gallon amount hauled per load. Transport and less than-transport freight will have surcharges invoiced based on the weekly DOE surcharge average. The surcharge percentage is updated weekly and can be sent to the City of Ft Worth or Participating Agencies upon request. Tankwagon deliveries are not subject to fuel surcharge, or pump fees. Accessorial charges, such as pump fees, split fees and demurrage will only be charged when applicable on transport, or less than transport loads. Attached are examples comparing current freight rates with proposed freight rates and fuel surcharge. Freight rates are based on proposed distance schedule. Surcharge is based on attached Surcharge Table. Please see “Question 1a” attachment for freight charge comparison and freight invoices Please see “Question 1b” attachment for Surcharge Table 2) Per our analysis, our proposed pricing structure would offer a total saving of $2,886 for the City of Fort Worth for deliveries during April, May and June 2014. Please See “Question 2” attachment for table. 3) We contract with over 200 carriers and work hard to find the best service at the lowest freight rate. Our Supply & Logistics group closely monitors every load, every day. Our Supply & Logistics team selects carriers based on their ability to meet the best combination of service, reliability and cost. The freight schedule provided in our proposal would act as a ruler or guide for the freight charges for delivery from nearest OPIS City or Terminal to the City of Ft Worth and Participating Agencies. Freight rates will be in- line with the freight schedule provided. Whenever possible, we will charge a lower rate than provided in the Freight Schedule. TAC Energy delivers approximately 1 billion gallons per a year. We are able to maintain a competitive freight cost advantage by contracting nationally and partnering locally with carriers. Please see “Question 3” attachment for screenshot of the carrier selection process. 2 100 Crescent Court, Suite 1600 Dallas, TX 75201 972.807.7873 www.tacenergy.com 4) Any participating agency may audit this contract for compliance simply by submitting a written request to TAC Energy including the details of the timing and locations to review. TAC Energy will provide copies of freight invoices, bill of ladings, OPIS index history, and any other documents deemed necessary for auditing purposes. 5) There are no foreseeable restrictions on our abilities to supply any agency nationwide. We aim for a seamless transition for the agency changing their purchasing through TAC Energy. When possible, we will arrange for delivery through the agency’s current carrier and have the new customer’s account set up for delivery as quickly as possible to avoid interrupting their operations. 6) Our first step in providing a cost/savings analysis is to establish confidence between the requesting agency and TAC Energy. Most of the time, this is accomplished through the use of a Non-Disclosure Agreement. Next, TAC collects current purchasing information in the form of invoices or, if the agency is a current contract customer, historical loading data. TAC then analyzes the data into product, freight, and tax costs in order to compare each factor accurately. The resulting comparison can be organized or summarized however the agency would prefer in order to effectively show potential savings. Additional studies are available on request such as arbitrage analysis, pricing index analysis, and wholesale vs. retail comparisons. 7) Following receipt of the new customer’s information, new account set-ups can be completed in 2-3 business days, or sooner. New delivery locations to existing accounts can be set up within a couple of hours. See our New Customer Set-Up form below. Please see “Question 7” attachment for New Customer Set-up Form. 8) TAC Energy purchases in terminals across the 48 contiguous states. See below list for specific markets and terminals. Transitioning into new markets is made easy by our supplier relationships and strong purchasing power. In the event of a supply disruption, or allocation restrictions, we utilize alternate sources to keep the City of Fort Worth, or any Participating Agency supplied. Options during a supply disruption include; alternate sourcing, long hauling fuel from the nearest functional terminal, or purchasing from private nearby bulk plants. TAC Energy has an Emergency Fuel Plan outlined in our proposal, which can be applied during the course of a supply disruption. Please see “Question 8A” attachment for table Please see “Question 8B” attachment for Emergency Fuel Plan 3 100 Crescent Court, Suite 1600 Dallas, TX 75201 972.807.7873 www.tacenergy.com 9) We would provide Diesel Exhaust Fluid to the City of Fort Worth and PA deliveries in jugs, drums, totes or bulk tank deliveries. Pricing will fluctuate based on the monthly average of the NOLA Urea index published by Profercy. See attached for current month prices. Please see “Question 9” attachment 10) We will supply e85 in the Dallas/Fort Worth area from the nearest terminal that either, stores pre-blended e85 gas or terminal that allows for splash blending of ethanol and regular gasoline. Pricing will be based on the Dallas Metro OPIS Unbranded Contract Average Net Index with no differential. E85 can be hauled via transport or tankwagon and would be priced accordingly to the same freight schedule as gasoline or diesel deliveries. 11) TAC Energy can provide Jet Fuel meeting specifications of product at the Dallas Motiva terminal. Please note, Motiva will not have Jet A at their terminal effective in November 2014. However, we have arranged for Jet A with the same spec for pick up at the Dallas Magellan terminal. TAC Supply & Logistics will arrange for delivery via transport with Jet fuel hauling capabilities when requested by the City of Fort Worth or participating agency. Pricing will be based on the Prior Week average of Platts US Gulf Coast Spot pipeline mean for Jet-A w/out additive(Colonial 54 Grade) plus a differential of +.145 per gallon, or +.16 with additive. 12) Please see the pricing formula provided in question 11. TAC Energy would gladly provide a fuel audit on the City of Fort Worth’s current Jet purchasing to provide the most competitive pricing. 13) TAC Energy can provide Biodiesel with Soy-Methyl-Ester to the City of Fort Worth, or Participating Agency when required. Local DFW terminals are typically supplying a blend of SME and other biodiesel components in the summer, and SME in the winter. 4 100 Crescent Court, Suite 1600 Dallas, TX 75201 972.807.7873 www.tacenergy.com 14) A) As outlined in our submission, TAC Energy is committing to support this contract starting with our CEO and owner Greg Arnold, along with our COO Fred Sloan, so that our entire organization is aware of and dedicated to the opportunities it affords nationwide. Over the past 5 years, we have gone through a complete overhaul of our back office systems, relocated our sales and marketing operations to Dallas, and have added new sales offices in the Denver, Tulsa, Seattle and Chicago markets, all of which will expand our ability to market this contract across the country. Our initial efforts will involve corporate communications internally via our executive leadership, and expand nationally via our co-branded website and industry publications. From there we will work together on industry events and customer visits, along with direct marketing campaigns to target the National IPA audience. B) TAC Energy is eager to partner with National IPA to market the City of Ft. Worth contract in both regional and national tradeshows, as well as via industry and national media outlets. Organizations TAC is a member of today: NACS SIGMA Oklahoma Petroleum Marketers’ & Convenience Store Association (OPMCA) Arkansas Oil Marketer’s Association (AOMA) DFW Transportation Club Conferences TAC attends: NACS TX Food & Fuel SIGMA Atlantic Region Energy Expo (AREE) Western Petroleum Marketers’ Association (WPMA) Oklahoma Petroleum Marketers’ & Convenience Store Association (OPMCA) Arkansas Oil Marketer’s Association (AOMA) DFW Transportation Club Schneider Refined Fuels Summit NBAA Industry Newsletters TAC Energy subscribes to that we will approach regarding news releases about the contract: Oil Price Information Service (OPIS) Platts Oilgram Argus Media Telvent DTN AXXIS C) We do not have any exceptions. 5 100 Crescent Court, Suite 1600 Dallas, TX 75201 972.807.7873 www.tacenergy.com Question 1A Delivery Type Agency Delivery Date BOL# OPIS Market Net Gallons Gross Gallons Current Freight RateProposed Freight RateSurcharge Difference Per GallonExtended Difference Transport Load City of Ft Worth 8/1/14 1710429 Dallas Metro 8357 8500 0.0152 0.0161 37% $ 0.0069 $ 136.85 Less Than Transport TX DOT 8/5/14 2212051 Houston 4166 7500 0.0573 0.0285 37% $ (0.0183) $ (136.91) Tankwagon Texas Parks & Wildlife 8/26/14 686142 San Antonio 798 798 0.1995 0.2000 0 $ 0.0005 $ 0.3990 Question 1B Surcharges will fluctuate weekly based on the Department of Energy US On-Highway Diesel Fuel Price for Gulf Coast (PADD 3). The Price per gallon will be translated to a surcharge percentage based on the table below.
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