Memphis Light, Gas and Water Division has entered into a 10-year contract to supply liquefied natural gas (LNG) for United Parcel Service’s fleet operation in the Greater Memphis area.

UPS is expanding its use of LNG as a transportation fuel by replacing many of the diesel tractors with LNG-fueled tractors to serve the Greater Memphis area. Under the contract, MLGW’s Capleville LNG plant will supply UPS with an average of 265,000 gallons of LNG per month for its new fueling station to be built in Memphis by the end of 2014, which UPS will own and operate.

“When other shipping and logistics companies are talking about possibilities, we are putting alternative fueled vehicles on the highway,” said Scott Wicker, UPS Chief Sustainability Officer. “LNG is a good alternative to petroleum-based fuel for long-haul delivery fleets as it is abundant and produces reduced emissions at less cost. At UPS, we are helping to knock down some of the biggest hurdles to broad market acceptance of LNG in commercial transportation by continuing to establish vehicle demand, fuel and maintenance infrastructures.  We plan expansion through infrastructure partnerships and a broader fleet in states that are leading the way to make alternative fuel vehicles economically feasible,” Wicker said.

For MLGW, the UPS contract is the latest development in its LNG sales business, which started in August 2012. Since then, MLGW has sold three million gallons of LNG, generating about $2 million in revenues. The Capleville plant has the capacity to produce 65,000 gallons of LNG per day – with room for expansion.

“This is another positive development for MLGW’s LNG business,” said MLGW President and CEO Jerry R. Collins Jr. “We have plenty of room for growth.”

MLGW is the largest three-service public power utility in the nation, serving more than 420,000 customers in Memphis and Shelby County.