posted 05/18/10 09:39 AM | updated 05/18/10 09:39 AM
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Trolleys save $, but financial case depends on price of oil

By scott
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Based on our comments and conversations, it's safe to say that the majority of people in the Central District would be sorry to see our trolley buses converted diesel. The livability aspects are important, such as how quiet they are. But there's a common-sense efficiency aspect too: we've got cheap, environmentally friendly hydropower in Seattle. That must be better and cheaper than diesel, right?

We asked Metro for the raw data, and can say that yes, electric trolley buses have a big efficiency advantage over their diesel equivalents. Here's how it shakes out:

  • Trolley buses cost $0.35 per mile for electricity, or $1,021,854 for all of 2009
  • Diesel buses cost $1.79 per mile for fuel. Based on current price of $2.30 per gallon, that would have cost $5,228,701 to run on the same routes as the existing trolley network

So based on raw energy prices, trolleys have a $4 million advantage over diesel buses per year.

But trolleys have a big additional cost that diesels don't. The network of wires that power them requires constant maintenance, as they occasionally break or have to be moved for construction projects. Metro says that averages to $1.17 per mile of trolley service, or $3,400,367 for all of 2009.

That reduces the trolley cost savings to $806,480. Of course that money goes to a completely different place, into the pockets of local workers vs. paid to overseas oil producers. But it does significantly reduce the absolute cost savings of trolley buses.

The problem is that the core of the county's possible decision to abandon the trolleys is driven not by operational costs, but by capital costs. The existing bus fleet will be worn out in 2015, and new trolley buses are much more expensive than diesel hybrids. The Seattle Times reported that it's at least $280,000 more expensive per bus. That adds up to $44 million to replace all 159 trolley buses.

So in many ways this comes down to a very simple financial equation. Is the capital cost for new trolley equipment worth the projected operational cost savings over the life of the buses? 

The answer is maybe, and depends on how much we expect the price of oil to increase over the next 20 years.

We broke out our long-neglected Engineering Economy textbook to calculate the time-value of money:

  • If we assume that fuel prices will grow at 6% a year (to $7.37 a gallon in 2030), the operational cost savings are only worth $27 million, which is not enough to close the gap for the increased capital cost
  • However, if we assume that fuel inflation will be 10% a year (to $15.47 a gallon in 2030), the operational cost savings are worth $74 million, which is easily enough to justify the purchase price of new trolley buses
  • A fuel-inflation rate of 7.75% ($10.23 a gallon in 2030) would equalize operational savings and capital costs.

So if gas prices go up at the rate we saw a few years ago, it's a no-brainer to invest more to keep the trolley bus network.

Stay tuned as we look at other aspects of the trolley bus decision over coming weeks.

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Time-Value?
Thanks for the great write-up!! Did your final calculations factor in the the time-value of savings? I couldn't tell. If not, that strengthens the case for diesel, right?
Comment by Time-Value
May 18, 2010
RE: Time-Value?
The analysis of whether operating cost savings are worth the capitol investment do use the time-value of the funds from 2015 to 2030, using a 5% interest rate (the average of what the county pays on muni bonds based on a cursory examination of published rates)
Comment by scott
May 18, 2010
trolley busses
one thing that appears to be left out of the equation is that the trolley buses last almost twice as long as a diesel.
there is the unknown of the Battery replacement/disposal cost to the hybrids, also hybrids have problems on long steep hills or when several stops are made on a hill depleting the battery.
also Hybrid buses are considerably heavier than a trolley bus so they do much more damage to the roadways

also in the past the mechanicals of a trolleybus have been transfered to a new bus "Body" thus saving many thousands of dollars. I have always wondered why a trolleybus should cost more than a hybrid since it is basically a hybrid without the big engine, fuel tank and batteries...???

and the overhead wire costs last year were probably higher than average because of the work in the tunnel getting ready for the light rail having to move stuff around. is the cost of overhead including power costs combined with light rail since the same crews could work on both and they probably buy the power together. But overhead wire costs are investments and not operating and should be in the capitol budget.

the only significanct advantage a bus has is that it is easier to dispatch because any bus can go on anyroute, the dispatcher has to work a little harder to keep the two fleets seperated, modern trolleybuses are not even tied to the overhead wires and have either battery or small diesel engines that can operate them at limited speeds for up to 15-20 miles. the New ones in Philadelphia even raise and lower the poles automatically.

and to comment on the time value part, trolleybuses... read more
Comment by Bob
May 18, 2010
RE: trolley busses
The trolley wire moves related to light rail were part of Sound Transits capital construction budget and shouldn't be included in Metro's overhead. And unless it's a Metro project the costs to move wires as a result of construction are covered by the project owner of that particular project.
Comment by DCO
May 18, 2010
Factor in the savings to stop mgmt consultants & diesel effects to human health?
1 - Have you considered the cost savings that Metro could save to stop engaging "high priced management consultants" who run around to try to justify diesel buses?
2 - Are you aware of the findings research that U of W professor J. Sally Liu published on the harmful effects of diesel to humans?
Comment by Shar
May 18, 2010
Trolley coaches vs. Diesel buses
WHAT ABOUT THE LAW:

Air pollution is illegal and no Federal funds {to purchase Diesel buses} are allowed unless
local plans show cleaner air. A good lawyer ought to be able to
stop trolley coach abandonment by suing Metro. Also, last FTA data
I have says trolley coaches cost $ 10 per hour less to operate than
Diesel buses. Why waste money on Diesel buses, just to make
smoke and import Gulf, Iranian, Venezuelan and Muslim oil.?

It would be a tragic crime to convert from clean, green hydro-electric powered trolley coaches to noisy, polluting Diesel buses, hybrid or otherwise. Anyone who would do someting like that needs to spend some time in prison for destruction of a valuable public asset and property.

And all of this discussion while millions of gallons of oil spill into and pollute the Gulf of Mexico !! When will we ever learn that we have to get off of oil in this country.
Comment by Transit Jeff
May 18, 2010
$1.79/mile for fuel, fuel = $2.30/gallon
Is that a typo? Or do the diesel buses really only get 1.28 mpg?
Comment by McMullet
May 18, 2010
RE: $1.79/mile for fuel, fuel = $2.30/gallon
The number we got from Metro was that the diesel buses use 4.31 gallons of fuel per service-hour. There were 527,459 trolley bus service-hours in 2009, and 2,906,297 service-miles. Note that mileage per "service-hour" and "service-mile" counts only the time that the bus is in service on its route, and not the time/miles it takes to get to and from that route (when it is not in service). So that lowers the numerator in the miles/gallon equation, resulting in a lower rate.

For reference, this PI story says that the hybrid buses only get 3.75 mpg overall: http://www.seattlepi.com/transportation/203509_metro13.html

And that's typically on long-haul suburban routes. You would expect lower performance on congested, hilly, inner-city routes such as those currently serviced by trolley buses.
Comment by scott
May 18, 2010
RE: $1.79/mile for fuel, fuel = $2.30/gallon
What's worse is that the study used 5mpg for diesel hybrids - a number they've never achieved even on long haul routes let alone up hills in Seattle.
Comment by Matt the Engineer
May 19, 2010
Carbon (GHG) Costs
Do you know if the analysts are taking the potential future cost of carbon emissions into account? If you are looking at a 20 year life span, it is likely that there will be some form of pricing for greenhouse gas emissions before the end of that time frame.

Hybrid diesels emit approximately 1,820 grams/mile greenhouse gases (GHG). At an expected minimum rate of $15/ton of CO2 equivalent emissions, with 2,906,297 service miles per year, diesel hybrids would have a minimum additional cost of approximately $79,000/year.

The GHG emissions of electric trolley buses would depend on the generation source of the electricity. Since only about 2% of City Light's electrical generation is based on fossil fuel sources, the operating cost for trolley bus emissions should be significantly less than for diesel hybrid buses.
Comment by Jen B
May 18, 2010
RE: Carbon (GHG) Costs
Excellent question - we'll ask for one of our upcoming stories
Comment by scott
May 18, 2010
Replacing the electric trolley busses with diesel or hybrid
Aside from all of the advantages of the trolley over diesel busses such as quiet, ability to climb hills and the overall cleanliness of the trolley, just look at a street with the trolley and a similar street with diesel busses. There is much less dust and dirt on the street and sidewalk etc where they run. No smog or air pollution and we all know that the cost of petroleum is going to go up and do we want to be dependent on oil from the Middle East? I personally have seen some very attractive low floor trolley busses in Eastern Europe and in China where trolley busses are the rule and not the exception. I bet the cost is a lot closer to a diesel and less expensive than a hybrid bus than we have been told. It is time to expand the search for a suitable replacement for Seattle’s trolley busses. Because of Seattle’s trolley busses advantages they should be kept even if they do cost more which is not the case. Also it appears that the “cost” of overhead trolley wire is inflated to make to replacement of trolley busses look better.

If the hybrid busses are so wonderful maybe they should be tested on the heaviest trolley lines mixed with trolley busses and see just how well they can keep up. Can they keep the schedule, can they start on hills, are they as quiet, do they cost less to run and how do they hold up to Seattle’s overall service environment? If they can then maybe it is time to replace the trolley’s, but first lets be sure that hybrids or even clean diesels can do the job as well as the trolley’s.
Comment by Interurbans
May 18, 2010
hybrids clean???
I don't know about you but I hate going down into the tunnel since the switch from trolleybuses to hybrids even to catch the light rail, my eyes burn and my nose is raw everytime.

if the hybrids are so dern clean why is the air so dang foul.

Bob
Comment by Bob
May 19, 2010
so now what...
So will some 'transit expert' in the city make the final call to kill the popular and better electric bus design?

Is there anything to we can do?

Even if the $ were a break-even or less, I'd vote for electric - much much less pollution (noise and air). And less $ going to BP, Mid East and Exxon.

I'm sure the electrics will be killed by the 'process'. Someone should check in on thier lobbying/sales people in the area.
Comment by The Final Say
May 19, 2010
RE: so now what...
Metro is a County function, not City. It's the County Council that has the final say.
Comment by JohnS
May 19, 2010
Hedging and volatility
TransLink in BC used GPCs (Green Power Certificates) issued by BC Hydro to help finance their purchase of new trolley buses. In order for the Federation of Canadian Municipalities to guarantee a loan at below market interest to buy the buses, TransLink agreed to use the savings in interest payments to purchase GPCs. If a similar system is instituted in the U.S., that would be an additional savings beyond merely not being subject to carbon taxes. See: http://www.masstransitmag.com/publication/article.jsp?pubId=

It seems to me also that the trolley bus system serves as a hedge not only against future fuel price hikes, but against fuel price volatility as well. That should be a value, as well, although it might not be easy to calculate. As the demand/supply ratio pushes up future fuel prices, we'll also see increased price volatility.

Future fuel price raises and volatility might also lead us to consider replacing all diesel (and hybrid) buses on in-city routes with trolley bus routes - with the off-wire capability of the newer generations of trolley buses, bridges (Aurora, Fremont, Ballard, West Seattle, etc.) need no longer be barriers to extending the trolley bus system. If we dismantle the current system, we will never be able to replace it and will lose that option forever.
Comment by Steve
May 19, 2010
the up side
at least if we get rid of the electrics, we can breathe more deisel exhaust!
Comment by CD 22nd
May 19, 2010
trolleybuses vs diesel buses
Some railroads have used CMAQ funds to purchase low emission locomotives. Would not CMAQ money be available for the cost of trolleybuses? Or at least, the incremental cost vs diesel?
CMAQ is to improve air quality, and it is obvious that hydro-powered trolleybuses have zero emissions compared to serious emissions from even "clean" diesel (an oxymoron if ever there was one).
Plese refer to the Professional Engineers' opposition to diesel bus conversion several decades ago. The reasons are the same today.

Bill Vigrass, Transportation Economist and Planner
1813 Cardinal Lake Drive, Cherry Hill, NJ 08003.
856-816-2708 mobile.
Comment by Bill Vigrass
May 19, 2010
Electric Trolley Buses
One major factor missing in this cost analysis is the hill climbing ability of electric trolley buses. This is one of the main reasons that the electric system still exists. Trolleys are much better at climbing Seattle's steep hills than diesel buses. In the last few years San Francisco has converted several major bus lines to electric trolley buses because they perform better on steep hills. Also, the electric overhead department is still needed because of light rail and present and future streetcar lines. Eliminating trolley buses in Seattle would be a big mistake.
Comment by Gunther Gottfeld
May 19, 2010
Why Replace ALL of Them???
"The existing bus fleet will be worn out in 2015"

This assumption cannot be questioned often enough, or strongly enough. 2015 is just a number. What does "worn out" mean, and why is there no differentiation between the two types of trolleybus in use - the 60' Breda's (originally bought as dual use for transit through the downtown tunnel and later converted to all-electric), and the Gillig's (the 40' 'workhorse' - purchased as chassis with reworked older electric motors to save money)??

By all means - replace the Bredas. They never should have been put into use this way in the first place. But the Gillig's should run for another decade or more. Why wouldn't they?

Saying that the entire fleet needs to be scrapped based simply on age isn't responsible fiscal policy or even practical mechanical assessment. It's a mid-life crisis.
Comment by Jeff Welch
May 20, 2010
trolley busses
Are you aware of what Council Member Larry Phillips wrote into the Capitol Hill Blog? Apparently, he wants trolley busses and needs our support...
http://www.capitolhillseattle.com/2010/05/13/the-facts-about
Comment by Shar
May 20, 2010
Apples-to-Apples Comparison needed, please
Metro study apparently compared generic trolley bus costs to generic hybrid-diesel costs, when what we need is a comparison of the operating costs of trolleybuses on Seattle's trolleybus routes to the costs of hybrid-diesel operating costs on trolleybus routes. As has been pointed out here, hybrids operating on Seattle's hilly trolleybus routes would perform more poorly than they do on the average bus route.

Until we can see such a fair comparison, I call BS on the county's current analysis.
Comment by Transit Guy
May 20, 2010
This Analysis misses a huge operating cost
Deadhead times are not accounted for in this value analysis.

Trolleys have longer deadhead times, as they must travel on wire and can't use faster, alternative methods to get to their end of the line. Even adding a minute or two to a routes travel time over the year turns into serious money fast. I suspect it more than negates the fuel issue.
Comment by 2Tall
May 24, 2010
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