Report 98120 Summary - February 1999

Los Angeles County Metropolitan Transportation Authority


Converting Its Poorly Performing Alcohol-Fueled Buses to Diesel Is the Most Cost-Effective Option Available


The Los Angeles County Metropolitan Transportation Authority (MTA) coordinates all public transportation services in Los Angeles County, including long-range regional transportation, light and heavy commuter rail systems, and bus service. Our review focused on the financial aspects and current operational condition of the MTA's alcohol-fueled buses and on the MTA's decision to convert them to diesel-fueled buses. Based on the circumstances surrounding the purchase of the alcohol-fueled buses as well as the ongoing problems associated with them, we found that the MTA's choice to convert the buses to diesel is the most cost-effective option that also meets environmental standards.

Starting in 1989, the MTA anticipated changes in vehicle emissions standards and began experimenting with buses that ran on alcohol and compressed natural gas. The industry was just beginning to develop engines that operated on alternative fuels, and the MTA's choices for replacing and expanding its bus fleet with alternatively fueled buses were limited. By fiscal year 1992-93, it owned 333 alcohol-fueled buses, comprising 14 percent of its fleet and constituting one of the largest alternatively fueled fleets in the nation.

The MTA, along with other transit districts, encountered many problems with these alcohol-fueled buses, despite its reasonable efforts to follow the engine maintenance requirements in the purchase agreements. The MTA therefore pursued its rights under the warranty provisions included in the purchase agreements. By 1996, the warranties had covered at least $16 million in repair costs.

By February 1998, the MTA had pulled 127 alcohol-fueled buses with failed engines and expired warranties out of service. By this action, the MTA risked losing the federal government's 80 percent share of the more than $50 million it still owed on these buses. In response to this problem, its board of directors approved the MTA's recommendation to convert all 324 of its remaining alcohol-fueled engines to diesel engines that meet appropriate vehicle emissions standards, thus ensuring ongoing service from this failing segment of its fleet. Under the plan, buses are not converted until their engines experience catastrophic failure and their warranties expire. As of January 1999, 42 buses have been converted to diesel while 234 of the remaining buses are nonoperational, leaving only 48 still in service.

Although converting all 324 of its remaining alcohol buses to diesel fuel is not the most environmentally sensitive option available to the MTA, the converted engines will meet both State and federal emissions standards for urban bus engine conversions. Converting the engines to cleaner compressed natural gas would cost the MTA an additional $88,300 per bus, which includes both the incremental difference to convert to compressed natural gas as well as the extra operating costs over the remaining service life of the bus, estimated at six years. This would entail a total cost of $85.7 million for converting all 324 buses, a considerably higher amount than the $57.1 million it would cost to convert the buses to diesel.


The MTA was pleased that our findings support its decision to convert its alcohol-fueled buses to diesel fuel.