Clean Energy Fuels Corp. (Form: 8-K, Received: 06/20/2008 06:01:55)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 19, 2008

CLEAN ENERGY FUELS CORP.

(Exact Name of Registrant as Specified in Charter)

Delaware	001-33480	33-0968580
(State or Other Jurisdiction of	(Commission File Number)	(IRS Employer Identification
Incorporation)		No.)

3020 Old Ranch Parkway, Suite 200 Seal Beach, California		90740
(Address of Principal Executive Offices)		Zip Code

(562) 493-2804

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01.

Other Information.

On June 19, 2008, the Public Transit Department of the City of Phoenix announced its recommendation that the City of Phoenix select a competitor of our company to supply the City of Phoenix and the Public Transit Department, Tempe, with liquefied natural gas (LNG) fuel for a one-year period commencing June 30, 2008, which date is the expiration date of our current LNG supply contract with the City of Phoenix and the Public Transit Department, Tempe. We intend to protest the recommendation pursuant to the protest procedures outlined in the bidding documentation issued by the City.

We currently fulfill a fixed-price contract with the City of Phoenix and the Public Transit Department, Tempe at a loss due to the increase in natural gas commodity costs subsequent to our entry into such contract in July, 2003. The total fuel consumption under our existing contract during the period commencing April 1, 2007 and ending March 31, 2008 was approximately 11.8 million LNG gallons , representing approximately 29% of the total LNG gallons we supplied to all customers during such period.

As previously disclosed in the Form 8-K we filed on April 22, 2008, we purchased certain natural gas futures contracts on April 18, 2008 to attempt to hedge our exposure to potential cash flow variability related to the fixed-price component of the aforementioned supply contract, for which we placed a bid. If our protest is unsuccessful and the City of Phoenix enters into a supply contract with our competitor, we currently plan to liquidate the futures contracts in an orderly fashion. As of June 18, 2008, the futures contracts have appreciated in value by approximately $5.1 million.

The purchase of the futures contracts was in accordance with the revised natural gas hedging policy adopted by our board of directors in February 2007. A further revised form of such policy, which is attached to this report as Exhibit 99.1 and incorporated by reference herein, was adopted by our board of directors on May 29, 2008.

Special Note Regarding Forward-Looking Statements

Certain statements in this current report on Form 8-K may constitute “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based upon current assumptions, expectations and beliefs concerning future developments and their potential effect on our business. These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecast in these forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in “Risk Factors” in Part I, Item 1A of our Form 10-K for the year ended December 31, 2007. These forward-looking statements speak only as of the date they were made and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Words such as “expects,” “intends,” “plans,” “projects,’ “believes,” “estimates,” and similar expressions are used to identify these forward looking statements, but their absence does not mean that a statement is not forward-looking.

Item 9.01.		Financial Statements and Exhibits.

	(d)	Exhibits.

	99.1	Revised Natural Gas Hedging Policy (adopted May 29, 2008)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: June 20, 2008		Clean Energy Fuels Corp.


	By:	/s/ Richard R. Wheeler
		Name: Richard R. Wheeler
		Title: Chief Financial Officer

Exhibit 99.1

CLEAN ENERGY FUELS CORP.

NATURAL GAS HEDGING POLICY

May 29 ^th , 2008

I. Objective

To establish guidelines for the purchase of natural gas futures contracts to normalize future cash flows related to the Company’s fixed-price sales contracts, with the goal of protecting the Company’s operating margins under such contracts.

II. Principles

General

1. The Company will not speculate in the futures market for natural gas or any other commodity. The Company may purchase futures contracts only to hedge its exposure to variability in expected future cash flows (such variability to be referred to hereafter as “Cash Flow Variability”) related to a particular fixed-price sales contract.

2. Subject to the conditions set forth below, the Company will purchase futures contracts in quantities reasonably expected to hedge effectively the Company’s exposure to Cash Flow Variability related to each fixed-price sales contract entered into after the date of this policy.

Hedging Related to New Fixed-Price Sales Contracts

3. Subject to paragraph 5, the Company may enter into a fixed-price sales contract with a customer only if the following three conditions are met:

(a) The Company purchases futures contracts in quantities reasonably expected to hedge effectively the Company’s exposure to Cash Flow Variability related to the fixed-price sales contract;

(b) The Company reasonably expects it will have funds sufficient: (i) to make the initial margin deposit(s) related to the intended futures contracts; and (ii) to cover anticipated margin calls related to these futures contracts; and

(c) For any fixed price sales contract covering 2.5 million gasoline gallon equivalents or more per year (or any contract that, combined with previous contracts that year, would cause the total gasoline equivalents contracted for to exceed 7.5 million annual gasoline gallon equivalents), the Company consults with the Derivative Committee regarding the proposed transaction, and the Derivative Committee approves both the entry into the fixed-price sales contract and the purchase of the associated futures contracts.

4. Subject to paragraph 5, as part of the futures contracts referenced in paragraph 3(a), for each fixed-price sales contract, the Company also will purchase sufficient futures contracts to hedge its exposure to the basis differential between: (a) the price of natural gas at the NYMEX Henry Hub delivery point; and (b) the price of natural gas at the customer’s delivery point.

5. The Company may enter into a fixed-price sales contract with a customer without satisfying the conditions set forth in paragraphs 3 or 4 if approved by the Derivative Committee in advance.

6. If the Company makes a firm offer on a fixed-price sales contract the Company may, prior to award or entry into the contract, purchase futures contracts in quantities reasonably expected to hedge effectively the Company’s exposure to Cash Flow Variability related to the fixed-price sales contract if approved by the Derivative Committee in advance of the purchase of the futures contracts.

Hedging Related to Other Fixed-Price Sales Contracts

7. Subject to paragraph 9, if, during the duration of a fixed-price sales contract (including, without limitation, a contract signed before the date of this policy, a contract entered into after the date of this policy where futures contracts were not originally purchased to hedge the contract, and a contract that subsequently experiences a significant increase in volume that was not originally contemplated when the original futures contracts were purchased to hedge the contract), the Company does not have associated futures contracts in place that are sufficient to hedge effectively the Company’s exposure to Cash Flow Variability related to that fixed-price sales contract, the Company may purchase futures contracts in quantities reasonably expected to hedge effectively the Company’s exposure to Cash Flow Variability related to that fixed-price sales contract, but only if the following two conditions are met:

(a) The Company reasonably expects it will have funds sufficient: (i) to make the initial margin deposit(s) related to the intended futures contracts; and (ii) to cover anticipated margin calls related to these futures contracts; and

(b) For any fixed price contract existing on the date of this policy covering 1.5 million gasoline gallon equivalents or more per year (or any such contract that, combined with previous such contracts that year, would cause the total gasoline equivalents contracted for to exceed 5 million annual gasoline gallon equivalents), the Company consults with the Derivative Committee regarding the proposed transaction, and the Derivative Committee approves the purchase of the futures contracts.

8. As part of the futures contracts referenced in paragraph 7, the Company also may purchase sufficient futures contracts to hedge its exposure to the basis differential between: (a) the price of natural gas at the NYMEX Henry Hub delivery point; and (b) the price of natural gas at the customer’s delivery point.

9. With respect to paragraph 7, the Company may purchase futures contracts without satisfying the conditions set forth in paragraphs 6(a) and (b) if approved by the Derivative Committee in advance.

Qualification for Hedge Accounting

10. The Company will attempt to qualify all futures contracts for hedge accounting as cash flow hedges under SFAS No. 133.

No Disposal of Futures Contracts Without Approval of Derivative Committee and Board

11. The Company will not sell or otherwise dispose of a futures contract during the duration of the associated fixed-price sales contract without the prior approval of the Derivative Committee and the Board.

Regular Updates Regarding Hedging Activities

12. Management will update regularly the Derivative Committee and the Board regarding its hedging activities and, to the extent there has been any hedging activities in a quarter, generate reports to be distributed to the Derivative Committee and the Board at that quarterly Board meeting. In addition to the quarterly reports, management will circulate to the Board and Derivative Committee a summary of the contract terms and futures contracts purchased related to any fixed price sales contract in excess of two million gasoline gallon equivalents per year.