AT&T Inc will spend $565 million over 10 years to replace or buy about 15,000 vehicles in its corporate fleet with cars and other vehicles that run on alternative fuels, the company said on Wednesday.

AT&T Chief Executive Randall Stephenson told the Economic Club of Washington that fleet modernization would significantly lower fuel costs.

The company will buy about 8,000 work vans or technician trucks that run on compressed natural gas over five years -- to be built by Ford.

Natural gas is cheaper, cleaner and we have plenty of it here domestically, Stephenson said in comments prepared for delivery to the meeting.

AT&T also plans to replace 7,100 other vehicles with hybrids and other advanced technology power systems over 10 years.

The hybrids will include a combination of gas-electric and plug-ins, and the trial includes mostly those made by Ford, with some from Toyota Motor Corp, according to Tim Harden, president of supply chain at the company.

T. Boone Pickens, a Texas billionaire oilman who has promoted the use of natural gas, praised AT&T's actions. In a statement, Pickens said it was a demonstration of real American corporate leadership that will be good for their bottom line, the environment and the country.

(Reporting by Kim Dixon; Editing by Bernard Orr and Jeffrey Benkoe)

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