PECO (electric utility 10Q info)greenspun.com : LUSENET : TimeBomb 2000 (Y2000) : One Thread
I apologize for the length of this post. Its the first substanial info my electric utility has divulged (via 10Q). It has not been reported on in the local media. I find the numbers shocking. My wife has talked to one of the project managers. The Y2K effort supposedly started in 1995 and has 300 people working on it. This is a major utility for the Northeast and supplies Philadelphia and environs. ============================================================
The Project The Project is divided into four major sections - Information Technology Systems (IT Systems), Embedded Technology (devices used to control, monitor or assist the operation of equipment, machinery or plant), Supply Chain(third-party suppliers and customers), and Contingency Planning. The general phases common to all sections are: (1) inventorying Year 2000 items; (2)assigning priorities to identified items; (3) assessing the Year 2000 readiness of items determined to be material to the Company; (4) converting material items that are determined not to be Year 2000 ready; (5) testing material items; and (6) designing and implementing contingency plans for each critical Company process. Material items are those believed by the Company to have a risk involving the safety of individuals, may cause damage to property or the environment, or affect revenues.
The IT Systems section includes both the conversion of applications software that is not Year 2000 ready and the replacement of software when available from the supplier. The Company estimates that the software conversion phase was approximately 48% complete at September 30, 1998, and the remaining conversions are on schedule to be tested and completed by June 1, 1999. The Company estimates that replacements and upgrades will be completed on schedule by June 1, 1999, although some vendor software replacements and upgrades are behind schedule. Contingency planning for IT Systems is scheduled to be completed by June 1, 1999. The Project has identified 343 critical IT Systems. The current readiness status of those systems is set forth below:
Number of Systems Progress Status - ----------------- ------------------------------------------------- 26 Systems Year 2000 Ready 87 Systems In Testing 191 Systems In Active Code Modification, Or Package Upgrading 39 Systems Scheduled to Start after September 30, 1998
The Embedded Technology section consists of hardware and systems software other than IT Systems. The Company estimates that the Embedded Technology section was approximately 61% complete at September 30, 1998, and the remaining conversions are on schedule to be tested and completed by June 1, 1999. Contingency planning for Embedded Technology is scheduled to be completed by June 1, 1999. The Project has identified 119 critical Embedded Technology systems. The current readiness status of those systems is set forth below:
Number of Systems Progress Status - ----------------- ------------------- 25 Systems Year 2000 Ready 94 Systems In Active Upgrading
The Supply Chain section includes the process of identifying and prioritizing critical suppliers and critical customers with common equipment at the direct interface level, and communicating with them about their plans and progress in addressing the Y2K Issue. The Company initiated formal communications with all of its critical suppliers and critical customers to determine the extent to which the Company may be vulnerable to their Year 2000 issues. The process of evaluating these critical suppliers and critical customers has commenced and is scheduled to be completed by June 1, 1999.
Costs The estimated total cost of the Project is $75.4 million, the majority of which will be incurred during testing. This estimate includes the Company's share of Year 2000 costs for jointly owned facilities. The total amount expended on the Project through September 30, 1998 was $7.3 million. The Company expects to fund the Project from operating cash flows. The Company's current cost estimate for the Project is set forth below:
$ Millions 1998 1999 2000 Total ----- ----- ----- ----- O&M 22.3 37.5 9.3 69.1 Capital 1.4 4.9 - 6.3 ----- ----- ----- ----- Total 23.7 42.4 9.3 75.4
Risks The Company's failure to become Year 2000 ready could result in an interruption in or a failure of certain normal business activities or operations. In addition, there can be no assurance that the systems of other companies on which the Company's systems rely or with which they communicate will be timely converted, or that a failure to convert by another company, or a conversion that is incompatible with the Company's systems, will not have a material adverse effect on the Company. Such failures could materially and adversely affect the Company's results of operations, liquidity and financial condition. The Company is currently developing contingency plans to address how to respond to events that may disrupt normal operations including activities with PJM Interconnection, L.L.C.
The costs of the Project and the date on which the Company plans to complete the Year 2000 modifications are based on estimates, which were derived utilizing numerous assumptions of future events including the continued availability of certain resources, third-party modification plans and other factors. However, there can be no assurance that these estimates will be achieved. Actual results could differ materially from the projections. Specific factors that might cause a material change include, but are not limited to, the availability and cost of personnel trained in this area, the ability to locate and correct all relevant computer programs and microprocessors, and similar uncertainties. The Project is expected to significantly reduce the Company's level of uncertainty about the Y2K Issue. The Company believes that the completion of the Project as scheduled reduces the possibility of significant interruptions of normal operations.
-- R. D..Herring (firstname.lastname@example.org), November 04, 1998
Sorry about the charts. Hope this works now.
Number of Systems Progress Status -------------------------------------------------
26 Systems Year 2000 Ready
87 Systems In Testing
191 Systems In Active Code Modification, Or Package Upgrading
39 Systems Scheduled to Start after September 30, 1998
Number of Systems Progress Status
- ----------------- -------------------
25 Systems Year 2000 Ready
94 Systems In Active Upgrading
1998 1999 2000 ----- ----- ----- ----- O&M 22.3 37.5 9.3 69.1
Capital 1.4 4.9 - 6.3
----- ----- ----- -----
Total 23.7 42.4 9.3 75.4
-- R. D..Herring (email@example.com), November 04, 1998.
That may be a very realistic set of numbers.
I find a couple of things interesting. One of these is that they have described the embedded system problem in solid numbers......(119 critical systems, 25 of which are Y2K ready, and 94 of which are being upgraded.
This is the first one I've seen for any company that projects expenditures in the year 2000. $10 mil is a lot to spend after a project is 'completed'.
I don't know whether this is good news or bad news. Maybe it's just honest news.
-- rocky (firstname.lastname@example.org), November 04, 1998.
The best kind of news: honest progress, but "we cannot guarantee...outside suppliers...are developing contingency plans...." is also thrown in there for good measure.
Again, notice that even with this budget, they cannot be sure. Target date(s) of middle of next year, and they began in 1995 - D**m! And again, nobody (despite the real money being "thrown away" on non-essentials) is saying "Oh, by the way, it was all a hoax, we didn't need to do this."
Best arguement I've seen yet against anybody who claims "its won't be a problem."
And kinda makes ya' feel for 'em utilities that started later, don't it?
Maybe the best gage (to judge progress against an unknown race) is some sort of ratio or scale or equation relating an electric utility's number of customers, amount of Y2K budget, amount spent to date, date Y2K efforts started, number of weeks scheduled until testing starts, number of systems identified (like PECO did above), number fixed, number of programs left, maybe somthing else.
Could do it on a plant basis too, but the number of customers seems to be best - more customers, more impact, more plants needed, not necessarily a more difficult programming job though.
(Remember those earlier questions about the Indy 500 not being finished yet - is not having compliant utilities "today" a cause for alarm? Or a cause for concern, but "they are on schedule to finish" so it may be okay?) Seems that some sort of uniform measuring technique could help at least sort the players so we would who least behind schedule....and who is hopelessly so far back that they are going backwards.
-- Robert A. Cook, P.E. (Kennesaw, GA) (email@example.com), November 05, 1998.
A real scale of completion and progress towards completion would be nice, but probably would not help much from a realistic point of view. You are never ever going to see a Y2K announcement without some lawyer adding weasel words. In our suit happy society, who can blame them. Some outfit that works its butt off on Y2K, is 99.99% compliant, has almost no problems that are out of the usual - can still get sued by some idiot, and loose, because they provided 'misleading information' about their product or service. Read the info on any software package or warranty on anything you buy nowadays - nothing, and I mean absolutely nothing you buy is warranted to be fit for any purpose whatsoever and if you don't like that then please don't buy our product. Congress could have spent a very good session reforming tort law - instead they decided to have a sex party. Stinks, doesn't it?
-- Paul Davis (firstname.lastname@example.org), November 05, 1998.
The thing that bothered me most was the money budgeted/money spent ratio. They have budgeted 75 million and have spent just over 7 as of the end of September. They are on track to be under budget and out of time.
-- R. D..Herring (email@example.com), November 05, 1998.
Thank you RD, I had missed that little piece of eveidence.
A former boss in the shipyard refused to listen to reports if somebody was "going to" or "expected to" or "planned to" start at so-and-so time or so-in-so shift.
He only wanted to know the time "when the metal was cut" and "when it was finished. " Said those were the only two times that counted, the rest was "horse****" . He aslo was the only one who pointed out one time when I was proudly showing how much money I was "saving" by being under budget that the only reason I was under budget was that no one was being charged to my submarine's jobs. It meant I was not getting any real work done.
Same thing here, or the amount of work is much less than anticipated, or it was easier than anticipated. Take your pick which is more likely.
-- Robert A. Cook, P.E. (Kennesaw, GA) (firstname.lastname@example.org), November 05, 1998.
Robert, when applying the Indy 500 example, you have to also ask: why is not one car at the finish line yet, when some got a headstart a WEEK ago? This is what makes not having anyone finished TODAY a very real concern. Does that mean, absolutely and positively, that they won't make it? No.... But that fact, plus an obvious lack of money being spent (which "should" be somewhat of a progress indicator), sure does not bode well. (Also, these "blame the lawyers" excuses for the lack of info are not very credible now. The "Good Samaritan" law became effective 10/19/1998. By labeling a Y2K statement to be a so-called "Year 2000 Readiness Disclosure", companies are protected from this statement being used against them in subsequent litigation.)
-- Jack (email@example.com), November 06, 1998.
I'm mentally picturing these 33 multi-million dollar Indy cars "racing" around the track - some being pushed by their pit crews, some with a lawn mower engine inside, and a few using the electric starting motors still hooked up the back, trailing 500 hundred miles of power cord behind them .... I'm just trying to figure out which ones haven't started yet.
-- Robert A. Cook, P.E. (Kennesaw, GA) (firstname.lastname@example.org), November 06, 1998.