Steel StructureInspection and Maintenance Practices

2015 Industry Survey Results

T h e S t r u c t u r e C o m p a n y

Table of ContentsI. Survey Background..................................................................................

III. Participant Information............................................................................IV. Maintenance Practices.............................................................................

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36

IX. Summary.................................................................................................

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1. How frequently do you conduct an overhead inspection of your transmission assets? 2. How is your overhead inspection conducted? 3. What other inspection technologies are currently utilized or are being considered to gather information on your system? 4. Is your company actively engaged in targeted investments to upgrade your transmission system? 5. What is your preferred structure material or standard that is specified when replacing older or reject structures? 6. Are you concerned about the below-grade condition of your steel transmission structures or concrete foundations on any part of your system?

1. Do your current maintenance practices for transmission include a (cyclical) below-grade inspection program for steel structures and/or foundations? 2. Which of the following components are included in your below-grade inspection program? 3. Are below-grade structural or foundation inspections performed as part of a circuit upgrade or uprate project asssessment? 4. Have you ever performed any structural evaluations with advanced, non-destructive inspection technologies?

1. Are protective coatings applied to still-serviceable foundation legs or steel poles at groundline as part of your inspection program? 2. When a tower leg or foundation is damaged, do you attempt to rehabilitate or replace the structure? 3. Under what circumstances would you consider structural or foundation rehabilitation or remediation a viable option? 4. Do you currently utilize Cathodic Protection as a method for structure life extension? 5. How often do you use Cathodic Protection on your system?

1. Do you currently use capital funding for any portion of your transmission inspection, maintenance or remediation/rehabilitation programs? 2. Which of the following contributed to your decision to capitalize the item? 3. Is there a dollar threshold or percentage of new structure cost that is used in the decision to rehabilitate vs. replace a structure? 4. Is there a dollar threshold the rehabilitation costs must exceed in order to quality as a capital expense?

1. How would you describe your structure and foundation drawing/record system? 2. How concerned are you about your company’s potential cost to comply with potential future NERC reliability standards/requirements?

V. Types of Inspection Programs/Other Inspection Technologies Used............................. 9

VI. Structural Remediation/Rehabilitation...............................................................11

VII. Program Funding Considerations.................................................................13

VIII. Additional Survey Topics..........................................................................

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5. Regarding the structural inspection and rehabilitation work you perform, whether overhead or below- grade, how do you identify and prioritize the circuit(s) to be inspected and the work to be completed?

II. Key Findings......................................................................................... 2

SURVEY BACKGROUNDIn July of 2015, Osmose sent an online survey to key transmission industry contacts nationally, with representatives from the investor-owned, cooperative, and municipal/governmental sectors. The purpose of the survey was to solicit feedback on current system maintenance practices, with particular emphasis on steel structures. Also included were questions about program funding considerations and plans for continued system investments, types of inspection programs, the use of various available inspection technologies, and concerns with potential future NERC compliance issues.

Given the limited response rates in certain geographic areas, the survey results can be considered as directionally-correct, but the potential for a higher margin of error within the individual question responses must be noted when looking at the results as representative of the programs and practices of the entire population of transmission owners and operators nationally, and within each industry sector.

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1. Wood structures are still in widespread use on transmission systems nationally

2. The majority of utilities conduct an overhead inspection of transmission lines annually, primarily using ground-based and/or flying inspections

3. LiDar and Infrared Scanning are the two most utilized inspection technologies

4. Most utilities reported they were actively engaged in targeted investments to upgrade their systems

5. Most utilities reported a concern about the below-grade condition of their structures or foundations, but many do not include a below-grade inspection as part of their current maintenance practices

6. There is widespread use of protective coatings on tower foundation legs and steel monopoles

7. Most utilities attempt to rehabilitate damaged tower legs or foundations to avoid wholesale structure replacement

8. The majority of utilities do not use Cathodic Protection for structure life extension

9. The majority of companies reported they did not use capital funding for any portion of their transmission inspection and rehabilitation programs

10. The majority of companies report being minimally concerned about potential costs to comply with future NERC requirements

KEY FINDINGS

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3%

38%

11%

32%

16%

Northeast

Southeast

Southwest

Mid-West

West

Geographic Region

Survey responses were received and analyzed from all three core industry segments, with the largest response coming from IOU’s at 41%, followed by cooperative’s at 35%, and municipal/governmental utilities at 22%. While all five geographic regions of the U.S. are technically represented by the results, a very minimal response came from the Northeast. Southeast and Mid-West utilities completed the survey at much higher rates than their counterparts in the West and Southwest.

PARTICIPANT INFORMATION

Company Type

Investor-Owned(IOU)

Cooperative

Municipal /PUD / PPD

41%

22%

35%

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System Size - Number of Transmission Structures

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

< 10,000

10,000 - 19,999

20,000 - 29,999

30,000 - 39,999

34%

19%

19%

6%

22% 40,000 +

System Size - Number of Transmission Line Miles

< 500

500 - 1,999

2,000 - 3,499

3,500 - 4,999

5,000 +

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

27%

18%

24%

12%

18%

Collectively, the total number of transmission line miles owned, operated, and maintained by the respondents is over 92,000 miles. The largest IOU system represented indicated a footprint covering 10,000-plus miles. The largest utility responding was a municipal/governmental utility indicating a total of approximately 16,000 miles on their system. The largest cooperative participating identified 5,000 miles of lines. In terms of structure numbers, the collective number of structures owned by the respondents totaled just under 800,000. Two respondents, one IOU and one municipal/governmental, claimed a total structure count of 100,000-plus. The largest cooperative indicated ownership of 45,000 structures.

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Steel Structure Types on System (i.e., 69% of respondents have self-weathering steel on their system)

69%

58%

Galvanized

Self-Weathering Steel (Corten)

Painted/Coated Steel

94%

Structure Types on System (i.e., 94% of respondents have steel monopoles on their system)

97%

61%

83%

17%

Wood

Concrete

Steel Monopole

Steel Lattice

Other

94%

Wood is still in significant use across all types of systems, with 97% of respondents reporting its continued use. Slightly lower use of wood was reported by the investor-owned utilities participating. Concrete is the least used structure type in aggregate. For non-traditional structure materials, fiberglass was reported in use on two large systems, one IOU in the West and one municipal/governmental utility in the Southeast.

For those companies utilizing steel structures, galvanized is the structure material most reported in use at 94%. Self-weathering steel (Corten) is next at 69%. Painted/coated steel structures are least likely to be used on cooperative systems.

Responses to this question ranged from four times per year all the way to every ten years, with the majority of respondents (66%) reporting they conduct an overhead inspection of their system annually. Municipal/governmental utilities surveyed were the most likely to have an inspection schedule in place on a cycle different than annually.

MAINTENANCE PRACTICES

66%

3%

3%

Annually

Every Two Years

Every Three Years

How frequently do you conduct an overhead inspection of your transmission assets?

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Tower Foundation Types (i.e., 74% of respondents have concrete foundations on their system)

42%

74%

Grillage/Steel

Concrete (Spread)

Deep Foundation/Piles

81%

The two most prevalent foundation types reported were (spread) concrete and deep pile foundations. Direct-buried steel grillage is in wide use at 42%. No other foundation types were reported in use by the survey respondents.

LiDar

Infrared Scanning

Photogrammetry/ Orthophotography

Corona Cameras

Other

Unmanned Aerial Drones with Cameras

71%

68%

35%

26%

6%

35%

What other inspection technologies are currently utilized or are being considered to gather information on your system?

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Not surprisingly, LiDar and IR Scanning were the most utilized inspection technologies reported in use given they have been around the longest. Utilization of (or consideration of) aerial drones is much more prevalent among IOU’s at 43% vs. 25% for cooperatives and the 0% reported for municipals. There was wide variation reported in the use of Corona Cameras with 64% of IOU respondents either using or considering them, vs. just 14% of municipals and 8% of coops.

How is your overhead inspection conducted?

80%

77%

17%

Ground Level with Binoculars

Flying /Helicopter

Climbing Inspection

The survey results indicated that by far the most used inspection methodologies continue to be a ground-based inspection using binoculars, along with a flying inspection utilizing helicopters or fixed wing aircraft. Cooperatives and municipals reported a lower use of flying inspections than did IOU’s (69% and 57%, respectively) vs. 93% for the investor-owned companies.

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What is your preferred structure material or standard that is specified when replacing older or reject structures?

Industry-wide there is no dominant material standard or preference when replacing older structures. Overall, the use of galvanized steel is most prevalent at 37%, followed by wood at 26%. There was substantial variation in responses between the different types of utilities. The reported use of galvanized steel was highest in the IOU (43%) and muni (57%) segments, but significantly less among cooperatives at 15% where wood and corten steel were the most-reported structure materials at 31% each.

26%

9%

37%

3%

17%

Wood

Concrete

Galvanized Steel

Painted Steel

Corten Steel

Other

Composite

6%

3%

The historical level of transmission investment has been significant across all industry segments, with investment growing from $2.7 billion in 1997 to $14.2 billion in 2012, a five-fold increase according to the U.S. Energy Information Administration. According to forecast data recently released from the C Three Group, “U.S. and Canadian investor-owned, government owned and cooperative utilities spent almost $32 billion in electric transmission capital expenditures in 2014, up by about 5% from 2013.” Investor-owned survey responses show that 79% are still actively engaged in system expansion or upgrades, not surprising given favorable FERC regulation/returns allowed for the bulk transmission system. The positive response rate is slightly less for the cooperative segment at 69%, and lower still for the municipal/governmental segment at 57%. This is consistent with another finding from the C Three report that spending in 2015 is expected to decline vs. 2014 and “the market for the remainder of the decade is likely to be dominated by lower voltage, smaller projects, albeit more of them.”

Is your company actively engaged in targeted investments to upgrade your transmission system?

71%Yes

No 29%

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Do your current maintenance practices for transmission include a (cyclical) below-grade inspection program for steel structures and/or foundations?

29%Yes

No 71%

The responses to this question generally validate our current industry knowledge and experience as a provider of below-grade structural inspection and rehabilitation services. An understanding of the impact of below-grade corrosion on structural integrity is slowly expanding, as is the acknowledgement that steel structures do not have an unlimited life span. Responses across all three market segments were very consistent with IOU (27%), cooperative (25%), and municipal/governmental (29%) responding affirmatively to the question.

TYPES OF INSPECTION PROGRAMS/OTHER INSPECTION TECHNOLOGIES USED

Are you concerned about the below-grade condition of your steel transmission structures or concrete foundations on any part of your system?

81%Yes

No 19%

While the aggregated response to this question would seem to indicate an industry-wide concern with below-grade structure or foundation condition, there was a significant variation among the companies responding. Investor-owned utilities answered this question with a response rate of 100% “Yes,” with cooperatives not far behind at 92%. Only 29% of municipal/governmental respondents indicated a concern. This may be related to different perceptions about the relative ages of their respective systems and the associated potential for corrosion or deterioration among those surveyed, or a higher confidence level that current programs or practices in place give the system owners a good read on below-grade structural condition.

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Are below-grade structural or foundation inspections performed as part of a circuit upgrade or uprate project asssessment?

20%Yes

No 80%

Which of the following components are included in your below-grade inspection program?

43%

43%

20%

23%

20%

N/A

General Visual Inspection

Partical Excavation

Collect Structural Condition Indicators Utilizing Digital Calipers, Micronometers, and/or Ultrasound

Identify and Evaluate Environmental Influences (Soil Resistivity, pH, etc.)

Evaluate Interaction with Other Structures in the ROW (Gas Pipeline Systems, etc.)

Prioritization of Structures by Condition

Prioritization of Structures by Enviromental Corrosion Potential

47%

27%

23%

For those companies that did acknowledge having a below-grade inspection program, conducting a general visual inspection (43%), and in some cases utilizing a partial excavation (47%) were the two program components most referenced. IOU’s were more likely to include excavation at 55%, with muni’s at the low end of the positive response rate to this question at 29%. Other program components like the collection of structural condition indicators, environmental influences, and corrosion potential were referenced by 20% or more of the companies responding.

This question also generated a wide variety of responses. While the aggregated response percentage indicates that 80% of companies do not look at below-grade structural condition as part of circuit upgrade/uprate projects, the positive response rate from the IOU segment at 45% indicates this is an important component of the evaluation process for many companies. No cooperative responded that this is a part of their assessment, and only 14% of municipals indicated it was included in their programs.

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Are protective coatings applied to still-serviceable foundation legs or steel poles at groundline as part of your inspection program?

57%Yes

No 43%

The use of protective coatings on foundation legs and steel monopoles was reported by 57% of survey respondents. The highest percentage reported was 70% for the IOU’s, with municipal/governmental respondents closely following at 67%. Cooperatives reported the use of coatings at a rate of 39%.

STRUCTURAL REMEDIATION/REHABILITATION

When a tower leg or foundation is damaged, do you attempt to rehabilitate or replace the structure?

81%Rehabilitate

Replace 19%

Have you ever performed any structural evaluations with advanced, non-destructive inspection technologies?

20%Yes

No 80%

Responses to this question again varied significantly by segment, with 36% of investor-owned utilities responding “Yes” vs. the aggregated response rate of 20%. No cooperative surveyed responded positively, and municipals responded “Yes” at a rate of 29%. The most referenced technology was the use of ultrasonic thickness measurements. One respondent indicated a MRI-type device was used to evaluate structures on their system, but no further details were provided.

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Under what circumstances would you consider structural or foundation rehabilitation or remediation a viable option? (select all that apply)

66%

24%

76%

62%

Other Than Damaged Leg/ Foundation, Tower Condition

Is Generally Good

Only One or Two Legs/ Foudnations Are Damaged

Cost to Replace Is Prohibitive

Environmental/Site Access Condi-tions Make Replacement Difficult

Do you currently utilize Cathodic Protection as a method for structure life extension?

40%Yes

No 60%

Cathodic Protection (CP), while somewhat broadly utilized, is not used by the majority of companies for structure life extension according to the survey responses received. The exception is the cooperative segment where 58% responded positively to this question. IOU’s reported use at a rate of 40%, while municipals responded positively at a rate of only 14%.

The follow-up to the Rehabilitate vs. Replace question outlined the more detailed circumstances used in the decision process. Cost is clearly the main driver, but there are several other factors which also have a high degree of significance, including environmental or difficult site access conditions, and an assessment of the overall structure condition and whether it justifies the repair attempt. One company also referenced using structure age and height and the need for more clearance as part of the decision framework.

Given the high cost of tower replacement, the overall positive response rate of 81% to the question of “Rehabilitate vs. Replace?” is not surprising. However, this is another area where there was a high degree of variability in the responses, with 90% of the IOU’s saying they attempt to rehabilitate a damaged tower leg or foundation, followed by cooperatives at 80%, and municipals saying they attempt this at a rate of 60%.

How often do you use Cathodic Protection on your system?

This follow-up question on Cathodic Protection inquired about the frequency of use. Forty-percent (40%) of IOU’s indicated they use CP on a frequent basis, compared to 25% of cooperatives and none of the municipals. “Never” or “Not Applicable” responses for all segments totaled 53%.

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Never

Occasionally

N/A

Frequently

30%

23%

23%

23%

Do you currently use capital funding for any portion of your transmission inspection, maintenance or remediation/rehabilitation programs?

44%Yes

No 57%

The percentage of companies using capital to fund portions of their maintenance programs was somewhat higher than expected at 44%. Several comments contained within the survey responses indicated that structure replacement costs were included in their programs--if this is how the question was interpreted then the greater use of capital funding is better explained. The highest positive response rate overall was for the IOU sector at 50%, with municipals next at 43% and cooperatives at 33%.

PROGRAM FUNDING CONSIDERATIONS

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If you answered yes to question 23, which of the following contributed to your decision to capitalize the item?

83%

33%

58%

8%

It Extended the Useful Life of Asset

If the Structure Was Not Rehabilitated, the Only

Alternative Was Replacement

The Work Done Was Part of a Larger Circuit Upgrade...

Other

For those companies that are using capital to fund parts of their maintenance programs, the basis or justification used is predominantly asset life extension, which from a financial accounting perspective qualifies as a “betterment” or substantial plant addition. Another strategy is to bundle the various program components together as part of a larger or more comprehensive circuit rehabilitation project, and in doing so then qualify most of the project costs for capital treatment, including inspection, engineering, rehabilitation, etc.

Is there a dollar threshold or percentage of new structure cost that is used in the decision to rehabilitate vs. replace a structure?

28%Yes

No 72%

The majority of utilities responding to this question did not indicate that a dollar threshold was used for structure rehabilitation versus replacement decisions. Responses were generally consistent across all utility types. Of those respondents who provided their criteria, one indicated they use 60% of the cost of a new structure as a guideline.

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Is there a dollar threshold the rehabilitation costs must exceed in order to qualify as a capital expense?

35%Yes

No 65%

As in question 25, the majority of respondents did not indicate there was a specific dollar value or threshold that a remediation project needed to meet to qualify for capital treatment. Those that did respond that a threshold was used provided dollar values as low as $2,000, up to $15,000. One company responded that the threshold varied and the decision was not based strictly on cost.

Regarding the structural inspection and rehabilitation work you perform, whether overhead or below-grade, how do you identify and prioritize the circuit(s) to be inspected and the work to be completed?There were a broad range of methodologies identified by the survey respondents regarding the identification and prioritization of circuit inspection and remediation, including:

• Age, environmental condition, and criticality to the system• Bulk power circuits first• Age, condition, planning studies• Age and results of walking inspection• 10-year and 15-year rotational cycles• Critical circuits first, then by voltage class and current loading• Contingency analysis using power flow modeling

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

How would you describe your structure and foundation drawing/record system?

Responses to this question varied significantly, with 50% of investor-owned utilities responding that they would describe their record system as “poor” or “fair.” That percentage increased to 64% for cooperatives and 83% for municipals. No respondents categorized their drawing/record-keeping systems as “Excellent.”

Poor

Good

Fair

21%

43%

36%

ADDITIONAL SURVEY TOPICS

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

How concerned are you about your company’s potential cost to comply with potential future NERC reliability standards/requirements?

Only a small percentage of respondents (14%) indicated a high degree of concern about the cost to comply with potential future NERC reliability standards or requirements. At the other end of the spectrum, an even smaller percentage (7%) indicated they were not concerned at all. The majority of respondents (50%) reported minimal concern, with municipals at 67% for this question category, IOU’s at 60% and cooperatives at 36%.

Not Concerned

Minimally Concerned

Very Concerned

Moderately Concerned

7%

50%

14%

29%

Given the value and criticality of transmission assets, not to mention the added regulatory oversight for the bulk transmission system, targeted system inspection and maintenance practices are very well-established and in-place across all industry segments. Most of the programs are cyclical, although cycles do vary greatly based on line voltage, age of the line, and other factors. Traditional inspection methodologies using visual or flying/helicopter are most consistently utilized, along with more well-established technologies like LiDar and IR Scanning. The consideration of or use of aerial drones is becoming more significant, but is not yet consistently utilized across all industry sectors.

Most companies are still focusing their inspection efforts on just the visible portion of the structure. Many companies expressed a concern with the below-grade condition of their steel structures and foundations, but relatively few have implemented programs to assess these structure components or incorporate below-grade assessments into circuit upgrade or uprate projects.

There is widespread use of protective coatings to extend structure life, and most utilities would prefer to rehabilitate versus replace a damaged structure if possible due to significant cost savings, difficult site/environmental conditions and other factors.

Cathodic Protection systems are not used for structure life extension on the majority of utility systems nationally. Use varies widely by industry segment.

In many cases, the costs for coatings and structural/foundational rehabilitation projects are being (or could be) considered for capital funding due to the fact that if the identified problem is not remediated, the only other option to transmission owners is replacement.

Most utilities rate their current structure drawing and record-keeping systems as “fair,” and the majority express either minimal or moderate concern with potential costs to comply with future NERC reliability standards or requirements.

SUMMARY

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As a turnkey solution provider, Osmose can assist utilities with every aspect of implementing a steel infrastructure maintenance program. We offer the industry expertise to develop effective corrosion and concrete programs, the engineering resources to design complex repairs, and the field labor to thoroughly assess structures and install repairs, cathodic protection, and protective coatings.

• Industry expertise in corrosion remediation• Experienced Professional Engineers to design steel and concrete repairs• Highly-trained field technicians and NACE-certified corrosion experts

Please direct questions about the survey to: David Bonk dbonk@osmose.com 770-632-6716

T h e S t r u c t u r e C o m p a n y

Turnkey Solutions from Osmose