At the request of the Council of the Town of Fort Macleod (“Fort Macleod or “the Town”), Forew ord FortisAlberta Inc. (“FortisAlberta” or the “Company”) prepared the following report (the “Assessment”) at the request of the Town of Fort MacLeod (the “Town”). It contains an assessment of the current condition of the Town’s electricity distribution system combined with FortisAlberta’s recommendations for improvements to the municipality’s existing maintenance programs and suggestions for future system planning priorities. This report has been prepared as a courtesy. It is not intended to be relied on by the Town as constituting engineering, legal or other advice obtained for operational or risk management purposes. FortisAlberta based its initial assessment of the Town’s electric utility infrastructure on information obtained from the Town’s Director of Operations and Director of Financial Services. This information was supplemented by the results of a line patrol performed by one of FortisAlberta’s experienced Power Line Technician (PLT) working in conjunction with the Company’s Maintenance Coordinator, a Designer, and an Environmental Advisor. A FortisAlberta Safety Code Officer conducted an examination of the infrastructure to assess compliance with applicable code provisions. The information gathered in this process was also reviewed by a senior FortisAlberta Asset Maintenance Engineer. FortisAlberta assessed the overall condition of the Town’s distribution system using its own current electric utility construction and maintenance standards. FortisAlberta has, at the Town’s request, offered several recommendations to address identified deficiencies in the condition of its distribution system assets and improve maintenance practices. i Table of Contents FOREWORD ____ i EXECUTIVE SUMMARY 1 INTRODUCTION 4 1.0 CONDITION ASSESSMENT OF ELECTRIC UTILITY INFRASTRUCTURE 5 WOOD POWER POLES 7 TRANSFORMERS 8 OVERHEAD CONDUCTOR 10 UNDERGROUND SYSTEM 13 STREETLIGHTS 15 EASEMENTS 17 SYSTEM DESIGN AND PLANNING 18 2.0 SAFETY REVIEW 19 3.0 ENVIRONMENTAL REVIEW 20 4.0 REVIEW OF CONSTRUCTION AND MAINTENANCE STANDARDS 21 RECOMMENDED DISTRIBUTION SYSTEM MAINTENANCE PROGRAMS 21 LINE MAINTENANCE PROGRAM 21 POLE MANAGEMENT PROGRAM 21 GROUND TESTING 22 SYSTEM RELIABILITY ASSESSMENTS 22 AIR BREAK SWITCH MAINTENANCE PROGRAM 22 RE-TIE CONDUCTOR PROGRAM 22 INSULATOR WASHING PROGRAM 22 LARGE TRANSFORMER MAINTENANCE PROGRAM 23 PADMOUNT TRANSFORMER MAINTENANCE PROGRAM 23 VEGETATION MANAGEMENT PROGRAM 23 REPAINTING 23 BULK LAMP REPLACEMENT 23 5.0 RECOMMENDED ELECTRIC UTILITY ACTIONS AND COSTS 24 ALTERNATE SOURCE OF ELECTRICITY 24 SYSTEM UPGRADE 24 ADDRESS NON-COMPLIANCE RISKS 24 COMPLETE URGENT MAINTENANCE 25 CREATE A MAINTENANCE PROGRAM WITH BUDGET ALLOCATIONS 26 Executive Summary FortisAlberta is pleased to provide its assessment about the Town of Fort Macleod’s electric distribution system along with its recommendations for upgrading and ongoing maintenance, as a courtesy to the Town. FortisAlberta has prepared this infrastructure and practices assessment utilizing extensive industry knowledge and expertise developed over many years of operating its own electric distribution system in accordance with good utility practice. This assessment also includes FortisAlberta’s recommendations for improvement of the Town’s existing utility construction and maintenance standards. Background The Town of Fort Macleod’s electric utility, consists of 99 kilometres of line, 963 power poles, 239 transformers and 428 streetlights (excluding streetlights owned by Alberta Transportation situated within the Town) and delivers power to 1,671 sites. The system is comprised of 56 per cent overhead and 44 per cent underground construction. FortisAlberta owns and operates a portion of the electric distribution system within the Town of Fort Macleod, delivering electricity to 48 customers, or approximately three per cent of customers in the area. These customers are mainly commercial customers located in the south-east corner of the Town. Summary of Electric System Assessment FortisAlberta completed its condition assessment of the Town’s electric distribution system in the second quarter of 2016. Overall, the Town of Fort Macleod’s electric utility system currently appears to be functioning at required levels. However, FortisAlberta identified a number of areas of concern during the course of its review. For example, the Company was unable to find any indication that the Town is currently employing documented maintenance programs. The absence of such programs indicates to FortisAlberta that the Town’s system may currently be operating to “run-to-fail.” In FortisAlberta’s view, “run-to-fail” approaches, which do not actively manage assets result in higher long-term maintenance costs and lower customer satisfaction. They also leave systems vulnerable to more frequent and extended power outages. 1 The Town of Fort Macleod’s electric distribution assets are summarized in the table below. Fort Macleod Customer Count (based on 2015 report) 1,671 Poles 963 Transformers 259* Overhead Conductor (metres) 55,789 Underground Conductor (metres) 43,072 Primary Conductor (metres) 45,872 Secondary Conductor (metres) 52,990 *Note: Total Transformer count includes units located in storage yard. Table 1 – Represents the breakdown of the Town’s infrastructure Key issues identified during the on-site assessment include: the poor condition of some identified power poles; instances of exposed and improperly protected ground rods; several instances of insufficient power line clearances; missing security locks and safety decals on underground equipment; and no evidence found of a procedure for the recording and reporting of oil spills from system assets. FortisAlberta’s assessment also confirmed that the Town does not currently administer a scheduled maintenance program for its electric distribution assets. FortisAlberta recommends that a program with the following attributes should be implemented as soon as possible: regularly scheduled detailed line patrols; wood pole testing and treatment; Polychlorinated Biphenyl (PCB) transformer labeling program; steel streetlight pole testing and lamp replacement; and repainting of weathered and rusted steel streetlight poles, transformers, and cubicles. The Town of Fort Macleod is in the process of upgrading its existing 4,160 V infrastructure to the current industry standard electric system voltage of 25 kV. FortisAlberta’s assessment confirms that good progress has been made to date on this initiative. However, approximately 38 per cent of the Town’s existing infrastructure is still operating at a voltage of 4,160 V or less. 2 FortisAlberta recommends that the Town continue upgrading its system and that it place a high priority on implementing current design and construction standards while doing so. The Company also recommends that the Town should adopt maintenance programs that align with best practices on a go-forward basis. The Company notes that additional efficiencies might be realized through scheduling coordination between remedial and maintenance activities e.g., poles of a vintage more than 40 years that are replaced, as part of the overall system upgrade would not be included in the testing and treatment aspect of the maintenance program. Summary of Standards and Construction Maintenance Review FortisAlberta’s review of the Town of Fort Macleod’s electric system standards and programs revealed no evidence that construction standards or maintenance programs and practices are currently being applied. Similarly, FortisAlberta was not provided with evidence that the Town is currently implementing any documented safety programs or policies. The Town does not currently appear to maintain its electric system using formal programs that require the adoption of standardized practices/or generate a complete documentary record of all maintenance activities performed to facilitate ongoing asset management. Good electric utility management practice includes the adoption of standardized maintenance and record keeping programs, which are important features of an effective overall maintenance policy. FortisAlberta is recommending the Town initiate: implementation of a Health and Safety Management System; development of comprehensive environmental management system; adoption and implementation of “good utility practice”based engineering standards; adoption of minimum construction standards, ensuring as the system is upgraded and new additions are built in accordance with current system codes and regulations; and creation of a database of easements and registered right-of-ways for the utility’s infrastructure located on private property. FortisAlberta also recommends that the Town immediately take steps to address the fact that its electric system is currently sourced on a single breaker at a substation located to the north west of the Town. The practical consequence of the current arrangement is that the Town’s entire electrical system has a single source of supply. An outage at this substation, or at any point along the feeder coming out of the substation, would result in a community-wide power outage. The best solution to the current problem would be to implement an alternate feeder solution to minimize the potential for wide-spread outages resulting from a failure at this single system location. 3 Introduction On May 9, 2016, the Town of Fort Macleod requested that FortisAlberta undertake an assessment of its self-operated electric distribution