Ecmweb 7877 Utility Market Pr
Ecmweb 7877 Utility Market Pr
Ecmweb 7877 Utility Market Pr
Ecmweb 7877 Utility Market Pr
Ecmweb 7877 Utility Market Pr

Electrical Contractors Help Power Utility Market

Nov. 16, 2015
With power infrastructure aging nationwide, electric utilities are turning to contractors to help upgrade, modernize, and harden their systems.

As opportunities heat up in the power market, more and more electrical contracting companies have trained their workforce, invested in new equipment, and pursued contracts to construct new power lines, restore systems following storms, and upgrade existing infrastructure. Strong Electric in Midland, Texas, is one such company. After breaking into the electric utility market five years ago, half of this electrical contractor’s workload is now comprised of this industry segment.

“Our [nation’s] infrastructure is getting old, which increases the demand for electrical contracting services,” says Garrett Gray, president and CEO of Strong Electric, LLC. “There is a huge need for our services right now.”

L.E. Myers Co., an MYR Group subsidiary, installed a 122-mile, double-circuit 345kV line from Medicine Lodge, Kan. to Spearville, Kan., which also included building two substations in Clark and Spearville, Kan. The project connects eastern and western Kansas in order to improve electric reliability, enable energy developers to tap into the transmission grid, and promote economic development in the region (Photo courtesy of MYR Group).

The company, which works nationwide, specializes in the oil, gas, and electric utility markets. As such, it works for privately owned utilities, electrical co-ops, and oil and energy companies.

“It is the same need, the same demand, and the same types of infrastructure,” he says. “A lot of our work has been in oil and gas, but as the oil market has dropped [off], we are able to focus more of our time on developing the utility power market.”

As utilities look to outsource work to power line contractors, more electrical contracting companies are specializing in this segment, according to Gray.

“There are a lot of people trying to get into the market, and it is highly competitive,” he says. “Due to the growing demand for electricity, however, we believe we have the opportunity to carve out a footprint in the market due to our mobility, geographical diversity, and professional approach to construction through planning and logistics.”

Colby Atwell, vice president of Capital Electric Line Builders, a Riverside, Mo.-based electrical contractor, says he has also seen an increase in competition from both union and non-union contractors.

“They are making their presence ever known, and we are all pulling from a limited labor resource,” Atwell says.

Pike Electric works on transmission lines in Columbia, S.C., following Hurricane Joaquin. Pike provided the permitting, engineering, procurement, and construction services for the project, which includes installation of 536 circuit miles of new 230/115kV transmission lines associated with the V.C. Summer Nuclear Station (Photo courtesy of Pike Electric).

Unlike other electrical contractors that have just entered the business, Capital Electric Line Builders has a history and tradition of working in the electric power industry. The firm started solely as a commercial electrical contractor in 1957. Then, a decade later, it branched out into the utility market.

“We have been growing ever since, and we specialize in just about everything — overhead, underground, distribution, substation, and transmission,” says Atwell, who estimates his company has around 250 field employees.

Market trends

Like any other market segment, the power industry has fluctuated over time. According to the third-quarter Construction Outlook report from FMI Corp., this market is projected to dip 8% in 2015, but is planned to rebound a bit with a 3% increase in 2016 and 2017, and then bump up 10% in 2018 and 9% in 2019.

Atwell remembers back in 2008, when the new housing market nearly came to a standstill, which, in turn, slowed down the electric utility distribution market. On the flip side, however, over the past seven years the transmission market remained strong due to the need to rebuild and replace aging high-voltage lines.

Atwell has seen a trend toward more reconductoring work. With the current technology available, electric utilities can now push more amperage through lines, therefore increasing their capacity. At the same time, electric utilities are also allocating significant funding toward modernizing and hardening their infrastructure. For example, utilities nationwide are hiring specialized contractors to install smart meters and other smart grid equipment. They are also turning to contract linemen to swap out aging wood poles with steel, concrete, or fiberglass alternatives to make utilities’ systems more robust and able to withstand severe storms.

For example, the continued need for utilities to invest in transmission and distribution infrastructure has sparked opportunities for MYR Group, a holding company of electrical contracting companies located throughout the United States and Canada. With roots dating back to 1891, the subsidiaries of MYR Group have delivered some of the largest transmission, distribution, and substation projects in the United States.

Capital Electric Line Builders completed this 108-mile, double-circuit 345kV transmission project in south central Kansas (Photo courtesy of Capital Electric).

Nearly every project MYR Group works on now has been designed to replace existing infrastructure, increase reliability, and/or add needed capacity.

Because the majority of the nation’s infrastructure was built more than 50 years ago, the increases in population, the rising use of technology, and the susceptibility to damage by external forces require the need for new or updated infrastructure, according to the MYR Group.

Electrical contractors are also building out new infrastructure to support new power plants. Case in point: South Carolina Electric & Gas turned to Pike Electric to provide permitting, engineering, procurement, and construction services for about 536 circuit miles of new 230/115kV transmission lines. The utility hired the contractor for this transmission build-out project due to the new V.C. Summer Nuclear Station being built in South Carolina, says Daniel Wright, director of contract administration for Pike Electric.

There’s also a need for new transmission line construction in the central area of the country. “In the Midwest, there is a lot of wind energy bottlenecked due to existing infrastructure being at capacity,” Atwell says. “To get the energy out of the Midwest and into other regions, there has been a big focus on a transmission build-out.”

Investing in equipment

While opportunities abound for electrical contracting companies in the utility industry, breaking into this market comes at a cost. Specifically, firms must purchase or rent a significant amount of heavy equipment for their field crews to complete the work.

“If electrical contractors want to get into this market, they need to have deep pockets because the tooling and equipment is a major cost,” Atwell says. “For that reason, we have a diversified fleet between leased, rented, and owned equipment.”

In the same vein, Gray says his company has a 50/50 split on owned and rental equipment. He estimated that it takes between $500,000 and $750,000 (for equipment and safety measures) per crew for equipment. To ensure that its crews have the equipment they need to get their jobs done safely and efficiently in the field, Strong Electric can pull bucket and boom trucks from 22 branches across Texas and nationwide.

Following an ice storm, Strong Electric crews worked rotating shifts 24/7 to restore power for thousands of utility customers (Photo courtesy of Strong Electric).

At MYR Group, the company owns and operates one of the largest fleets of specialized transmission and distribution equipment in the industry. Investing in and maintaining the fleet of almost 4,700 pieces of equipment requires a sizable capital investment and expenditures, but also allows the company to quickly and efficiently deploy necessary resources to various projects nationwide.

The firm’s fleet resources range from heavy-duty crew cabs customized for line work up to the largest conductor pullers, conductor tension machines, and setting cranes in the industry. MYR Group has complete wire set-ups for major transmission work, including equipment and tooling from 138kV to 765kV construction. Each setup includes a large puller and tension machine, wire stands, straw line pullers, sag cats, diggers, aerial devices for personnel and material, stringing blocks, and other support equipment and tooling. To supplement its own equipment resources, MYR Group has alliance agreements with many rental companies and manufacturers.

When working for clients, contractors are expected to perform work reliably, efficiently, and safely — all while meeting budget and schedule milestones to ensure on-time and on-budget completion of projects. Because the quality, utilization, and availability of the right equipment resources are imperative to meet these demands, MYR Group continually invests in state-of-the-art equipment, tooling, and technology to meet the anticipated demands of clients.

In addition to vehicles and heavy equipment, power line contractors are also investing in the latest technology to help their field workforce improve productivity and safety.

Mobile devices are helping power line contractors stay connected with both their workforce and utility clients. For example, Pike Electric, a privately owned contractor founded in 1945, has deployed iPads to its front-line leaders to take advantage of real-time data transfer through internally custom-built applications. Using the mobile technology, the contractor can track labor and equipment in real time during storm response, provide as-built information to its customers on a weekly basis, or enable basic logistical transfers like electronic timesheets. Employees are also able to tag photos and videos to work locations in the field and provide updated GPS maps to its customers as the work is progressing.

Working storms

When a contractor specializes in the utility market, working storms comes with the territory. Atwell says his company has worked on a number of storms over the years, but the one that stands out in his mind is Hurricane Sandy, which devastated the power system in the Northeast.

“It was the first time I had worked a storm of that magnitude,” Atwell says. “We were on it for four to six weeks, putting up new poles and services that were torn down in the hurricane.”

Strong Electric has also worked on many major storms, including a 2014 ice storm in Midland and Odessa, Texas, at the end of 2014. The company has also helped to restore power following flooding in south and east Texas as well as ice storms in Dallas. During the ice storms, ice can build up on the lines and rip down poles. As a result, the linemen focus mainly on overhead distribution replacement during storm restoration.

When severe weather strikes, Strong Electric can call upon linemen from its internal workforce. In addition, it can also pull 100 to 150 field workers from its database to restore electricity to its clients. By turning to strategic partnerships for additional resources, the firm can ensure it has all hands on deck.

“We have a very wide range labor pool, and when a storm hits, we can activate our employees to do the job,” Gray says. “We have the ability to go to the East or the West Coast — anywhere storm restoration is needed.”

In addition to providing overhead distribution, underground, and overhead repair/construction services, the contractor also offers storm assessment services.

“We are working on a grant to provide drone assessment to storm restoration,” Gray says. “When a storm hits, instead of power company employees driving out to find damage, we are researching and developing a product to fly a drone and assess and report damage for them.”

When it comes to storms, he says any power line contractor must be prepared — not only with the equipment and the manpower, but also the safety tools, rubber blankets, and all the protective equipment needed for the field workforce.

“When a storm hits, you don’t have a week to get ready — you have to be on the road tomorrow,” Gray says. “Over the years, we have made sure that we are prepared for large storms and projects.”

By working safe, providing continuous training to its field workforce, and equipping the line crews with the latest tools and technology, electrical contracting companies are finding success in the electric utility market. Although the market is competitive, it also offers opportunity to those contractors with the knowledge, resources, expertise, and experience to get the job done.

For example, Pike Electric has seen more opportunities within the renewable and design-build service line sector. The contractor provides siting, planning, engineering, design, construction, and maintenance for transmission and distribution power lines, substation, renewable energy, and turnkey EC projects as well as storm restoration services.

“As customers continue to outsource work, we experience growth throughout our many service lines,” says Jim Benfield, region vice president for Pike Electric.

Over the past few years, Gray says he’s seen an increase in the amount of opportunities for electrical contractors firms in the utility industry, due in part to the wave of retiring linemen.

“We are seeing a lot of the utility co-ops and the independently owned companies not replacing people who leave,” Gray
says. “They are looking more to the electrical contractors to take on liability, risk, and warranty, and they are seeing more benefits to outsourcing.”           

Fischbach is a freelance writer based in Overland Park, Kan. She can be reached at [email protected].

About the Author

Amy Florence Fischbach

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