Last week, I spoke about the importance of cycle count in terms of efficiency. Our numbers are consistently low, and that’s something we are especially proud of around here.
The final numbers are in, and I can say that annually, our cycle count has been at .25 or less since 2007. That’s 5 years running. So how did we get and keep our numbers so low?
I can sum it up in one word: communication.
Our paint is made great by three teams: Paint Makers in our production department, the technical folks in the lab and quality control. Internally, these departments have a genuine respect for each other’s work. They have trusted relationships that allow for feedback. Continue reading What Cycle Count Says About Teamwork→
In a paint company, as in most companies, there are multiple departments that must work effectively together to ensure the success of the organization. In a nutshell, there are a lot of moving parts (both literally and figuratively). It is easy to become “compartmentalized,” meaning you get focused on your one job in your one department, forgetting the “big picture. This can quickly result in delaying or altogether missing key communication between departments – a critical component for success.
At Induron, we have reaped big benefits in opening communication channels. A key example lies in three distinctly different parts of our organization: Manufacturing, Technical (R&D) and Sales. These are three very different departments, with specific roles in the organization, yet each one is dedicated to the same overall mission of increasing the sales and profitability of our company.
These three departments work closely with an open communication approach. Weekly sit-down discussions between these areas provide the most current “state of the business.” Through this approach, we’re able to have accurate information regarding progress on a key project. This has gone a long way toward eliminating a reactive approach, and instead collectively acting together to ensure success.
Another key benefit lies in “intra-communication” within larger departments, where different areas of one department communicate with each other. Our Manufacturing team interacts with the Manufacturing / Quality Control area on every production batch, where any process and performance issues are quickly identified and resolved. This effective and efficient process is a “test analysis and correction,” not just a “test.” Continue reading Communication: Your Key to Success→
This is a NEW ADDITION providing SIGNIFICANT IMPACT on the tower to ENHANCE SERVICE LIFE.
While fixing foundations maintains what’s already there, applying Induraguard 9200 is like adding a fresh layer. It’s a new addition. The process needs to be done on a larger scale, so it’s important enough to be closely looked at by the Public Utilities Commission (PUC). With the huge U.S. electrical grid that can rust over time, the importance is clear. When this helps a structure stay useful for much longer and costs much less than getting a new one, it’s a real benefit for ratepayers.
WHY are you hearing this now?
The recent FERC ruling outlined the specific requirements for obtaining CapEx treatment when revitalizing towers.
FERC (Federal Energy Regulatory Commission) Update Enables Capitalization of T&D Coatings Initiatives
Formerly, utility companies could include replacement costs for transmission towers and poles in their capitalization, but corrosion control for these assets was excluded. A groundbreaking shift introduced by the Federal Energy Regulatory Commission now allows utility providers to categorize corrosion control programs (coating programs) for transmission structures as a “significant addition,” thereby enabling them to capitalize these expenses for accounting purposes. This alteration is poised to significantly impact the condition of the nation’s aging electric utility infrastructure.
On February 22, 2022, the Federal Energy Regulatory Commission (FERC) approved a utility company’s proposal to classify their tower coating programs as “substantial additions.” The order (1) clarifies, “The Commission has previously permitted utilities to consider the addition of minor property items that were previously absent as substantial additions and to capitalize the related costs when such costs extend the useful life, operational capacity, or efficiency of the associated retirement units.” Utility companies are now authorized to capitalize on the costs linked with corrosion control. This change aligns with generally accepted accounting principles (GAAP) and offers various financial advantages, including a more balanced assets-to-liabilities ratio and reduced income fluctuations.
In numerous instances, corrosion control solutions such as coatings have been repeatedly applied to structures, demonstrating anticipated performance and proven outcomes. Corrosion control coating programs, such as Induraguard 9200, possess the capacity to effectively prolong the service life of structures indefinitely.
HOW is this possible?
PG&E successfully presented a rate case supporting their proposal, citing examples of Southern Company and other utilities employing similar CapEx treatment. The PUC specified certain documentation requirements, but in the end, they granted the CapEx treatment as long as those requirements were met.
“Why should the ratepayer or the environment be asked to bear the cost of a new tower when coatings can be used to keep the one we already have operating indefinitely at a much lower cost?”
In PG&E’s success rate case proposal, FERC highlighted that comparable accommodations have been extended to prominent utilities such as Georgia Power and Southern California Edison. This ruling established a much-needed precedent and framework for other utilities to make the case that they have a responsible coatings program. Such programs can significantly enhance existing structures and potentially extend their operational lifespan by two decades or beyond.
The Tower Is Revitalized
Once the integrity of the galvanizing is compromised, the tower’s initial environmental protection is ineffective. However, the structural integrity remains intact. Implementing a new protective measure will ensure its preservation.
The application of Induraguard 9200 involves installing it on energized towers, typically at a rate of 1-2 towers per day for standard sizes.
Results In Monetary and Environmental Savings
Using Induraguard 9200 to restore a tower costs much less than replacing the whole tower – less than a tenth of the cost. It achieves the same goal while significantly reducing the need for procurement, engineering, and other human resources.
The environmental impact of mining, fabricating, shipping, and installing a new tower is drastically more detrimental compared to the environmental impact of prolonging the use of existing infrastructure.
Achieves An Indefinite Service Life
These structures, composed of steel and reinforced concrete, possess an indefinite design life if we manage environmental deterioration. This means there is no predetermined limit on the amount of value and serviceability after the initial installation at the ratepayer’s expense.
By implementing future applications of Induraguard 9200, the potential utilization timeframe for the structure becomes limitless. This becomes especially significant due to the existing strain on constructing new power infrastructure. It underscores the fact that we cannot simultaneously construct all the required new facilities and overhaul the current grid.
Revitalization Is Now A Capital Expense
The utilization of Induron’s Induraguard 9200 as a protective coating has gained recognition as a Capital Expense by both FERC and Public Utilities Commissions across the United States. This acknowledgment enables the potential cost of installing a replacement tower to come off of ratepayers while permitting the utilization of CapEx funds for this undertaking.
The Replacement Tower Is Now A Capital Expense
Once the existing tower has reached the end of its serviceable lifespan, the cycle starts over — thorough planning, procurement efforts, and assessment for a rate case to install a new replacement tower that is incredibly expensive and potentially disruptive to critical power transmission. This will be classified as a Capital Expense, thereby falling within the responsibility of the ratepayers again.
The Tower Corrodes And Needs Replacement
As the galvanizing layer diminishes, corrosion sets in, initiating the deterioration of the asset itself. This progression leads to visible corrosion and a reduction in structural integrity, ultimately necessitating the replacement of the entire structure.
Maintenance is classified as an O&M expense
Maintenance activities for the tower are categorized under Operations & Maintenance expenditures. Given that the asset was acquired using CapEx funds from ratepayers, the mentality of operation-to-failure takes hold. The objective then shifts to maximizing the asset’s operational lifespan before allocating further CapEx funds for its replacement.
The Tower Needs Maintenance
Over the tower’s lifespan, regular maintenance tasks are performed. Bolts are periodically replaced, foundations undergo repairs, and in some instances, structural elements are swapped out. However, it’s important to note that these routine maintenance activities do not mitigate the gradual degradation of the galvanizing layer, which ultimately leads to corrosion and, ultimately, the failure of the entire structure over time.
The Tower Is Built
The need for a new power transmission line is assessed, followed by meticulous planning, procurement of materials, and installation. The newly constructed tower is fortified with a protective layer of zinc, commonly referred to as galvanizing, which can have a lifespan of 20 to 50 years, contingent upon its quality, quantity, and service environment. This is financed through Capital Expenditure (Capex) funding, thereby distributing the financial responsibility to ratepayers through their imposed rates.
