Water Heaters - Heavy consendsation on exhaust pipe

My exhaust pipe from my water heater has been having HEAVY consensation running down it. The pipe goes from my bawsement to the roof. I show no signs of rust of water in the attic, but the bottom of the pipe is starting to rust. A concern that comes to mind is the pipe rusting through and the exhaust gases (CO) emitting into my house.

Any idea what would be causing this amount of condensation ?? Any ideas on a fix for this ??

Where do you see the condensation? Is it so heavy it is seeping through a seam, or have you disconnected the pipe and looked in? How do you know it is not condensing on the outside?

I guess I didn't indicate this detail in the original post. the condensation (water) is dripping off the end of the pipe, and is running down the outside to the end. The outside of the pipe has the rust and water issues. Still concerned it will rust through. My guess was it had something to do with the temperature difference between the outgoing gas and the cold air.....but to cause this much condensation ??? That is what I dont know....why ???

I would attach a photo, but I cant figure out how. Keeps asking for a URL ???

My guess is the pipe is too large, what size is the pipe??? It should be sized to create enough draft so most of the exhaust gasses are out before they cool enough to condense. The norm in older houses used to be to run the heater and water heater into a 6-8" flue. With modern heaters being much more efficient, they are often not even using that flue any longer. The heat from a water heater is not enough to keep a draft in the large pipe, so the moist air condenses. Most water heaters need no more that a 3" pipe.

How much rain have you received lately and do you have a chimney cap? If no cap, be sure you check with the furnace manufacturer to see what is allowable.

Is the pipe triple wall pipe? If not, the basement is probably cold and the heat from the single wall pipe is causing the condensation. It always occurs on the warm side of a surface(the outside of the pipe). As the vent gets further away from the source of heat it cools and condensation is not as big a problem. Try replacing the pipe with triple wall pipe if possible. If not all of it, at least to the first section as far as possible. Hope this helps.