Contractual and supply issues related to electric vehicle charging

Governments are taking bold and much-needed steps towards an emissions-free future by acquiring more electric vehicles for transport fleets, setting targets for replacing diesel fleets and, in some cases, mandating electric fleets in their calls for offers. While this move to electric is encouraging from a sustainability perspective, the move away from traditional diesel vehicles within our bus networks exposes several issues within current contractual and procurement frameworks, which are not equipped to cope with this change.

Last year, Victoria’s Department of Transport announced a contract with public transport company Kinetic, which will bring 36 all-electric buses to the network by 2025 and five by June 2022. The city of Newcastle also unveiled its first electric truck as it pushes towards an all-electric fleet. In Tasmania, the state is funding a trial by Metro Tasmania this year of zero-emission hydrogen and electric buses.

As we welcome a new era of environmentally friendly public transport, the challenge for governments and transport operators will be to strike a balance within a changed contractual and procurement framework so that new and future technologies can be incorporated. in the network with certainty and without interruption. to its users.

Current agreements are failing

In Australia and in many parts of the world, urban transport services are provided by the private sector in conjunction with state governments. Typically, our states retain or receive assets and enter into franchise agreements with private contractors to operate and maintain the services.

Current bus franchise agreements in Victoria and New South Wales do not contemplate the large wholesale changes in the franchise environment required to move from diesel to electric fleets. For example, the Victorian model was written assuming that buses will be replaced on an identical basis (i.e. a diesel bus is replaced by another newer diesel bus). Yet going electric is a major change with many repercussions, as diesel and electric fleets require different maintenance regimes due to differences in technology, service and safety requirements.

Depots will need to be redeveloped, maintenance personnel will need to be replaced or retrained, and new depots closer to high voltage transmission lines may need to be acquired. This would create a period of flux and change, impacting timetables, transport routes and personnel.

Little flexibility in current contracts

Under franchise models, private operators can request to deviate from the bus replacement schedule, but this is usually limited to changes such as the fleet replacement date, rather than a complete overhaul of the type of vehicle. This has implications, depending on the jurisdiction, on the alleviation of the performance monitoring regime during any transition phase, or on the additional costs associated with the transition to an electric fleet.

In Victoria, operators have a general obligation to provide and maintain sufficient deposits to meet their obligations under the franchise agreement. However, the franchise agreement does not provide for terms of development of the depots to accommodate electric vehicles. There are also no provisions in the Victoria franchise agreement or the New South Wales service contract for major changes to bus timetables and routes if they were needed for electric fleets.

To submit or not to submit?

There are also questions about how contracts will be secured for electric vehicles. Most current contracts are not set up with the flexibility required to integrate electric vehicles. There are risks of an explosion in capital and recurrent expenditure, which means that the private sector could feel compelled to charge higher prices.

Whether organizing contracts by tender or open book, States must ensure that the process is as contestable as possible and must be attentive to the question of strategic assets, even in the development phase. test or pilot. Negotiating contractual provisions dealing with these issues upstream will help facilitate the transition to electricity and reconcile the interests of States and private operators.

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