Hello Everyone:

I received the following from Bob Granquist from CT - DPUC this week.

Notes from the Energy and Technology Committee January 19, 1999 meeting

On Jan. 19,1999, I attended the Connecticut State Legislature's Energy and Technology Committee meeting. At this particular meeting they asked utility companies that serve Connecticut customers to make brief presentations on their progress toward reaching Year 2000 compliance.

The following is a summary prepared from my notes. It consists of my own commentary on the readiness of each Connecticut utility industry as a whole followed by specfic comments made by each utility company. My commentary is based on the composit of the individual companies'comments and reflects my own opinion.

Electric Industry in Connecticut

In general, the ISO, CL&P and UI are well along in their remediation, replacement and testing process. Susceptibility to the Y2K bug seems to be much less than the public, and even the utilities, feared years and even months ago. For instance, transmission has been determined to be not affected by the "glitch." The majority of the exposures in the generating assets lie in the hundreds of embedded software chips residing in monitoring, emissions reporting, and production reporting devices; and nationwide research has shown that less than 2% of these devices are date sensitive, and therefore, 98% are considered compliant. In the distribution facilities, there are no directly related Y2K problems and the work being done relates to monitoring and reporting. Millstone and Seabrook have found no Y2K problems that would have prevented safety systems from shutting down the plant. This is consistent with other nuclear plants in the United States. Both companies are putting pressure on their suppliers to demonstrate or certify Y2K compliance and are planning to increase their fuel reserves by the end of 1999.

Independent System Operator (ISO) comments

The ISO is responsible for the management of the region's six-state bulk power generation and transmission systems as well as administering the wholesale electricity market place on behalf of the New England Power Pool.

• Y2K readiness progress in on track
• Transmission systems are not susceptible to the Y2K bug
• Will begin live testing of contingency plans in April
• Demand at that time of year (Jan 1) is approximately 40% less than summer peak demand and the ISO will also be requiring an increase in reserve generation capacity (spinning reserve) from 10-15% to 25%

CL&P's comments

• Most of their mission critical systems are Y2K ready
• 72% of their computer systems software applications are Y2K ready. The remaining 28% are in various stages of modification and validation
• 81% of device types which contain data sensitive computer chips are ready
• No Y2K problems with distribution system. (poles, lines, meters)
• Transmission systems are compliant. Found no Y2K issues in switches
• CONVEX controls the energy management system for power in the transmission system - Not through testing yet but expect no problems - Have a manual override system
• Y2K is not an issue in fossil fuel plants - Issue is in monitoring devices (emissions, etc)
• There are no Y2K problems which would shut down nuclear plants for safety reasons
• Will be increasing fuel storage capacity
• CL&P is working with the ISO on contingency plans and are enhancing their normal contingency plans

UI's comments

• 374 business processes identified. 240 have been verified to be compliant through testing, remediation, replacement or retirement
• mainframe hardware and software is completed
• All critical processes will be compliant by the end of the 2nd quarter
• Contingency planning is underway and will be completed by end of 1st quarter

Gas industry in Connecticut

CNG, Yankee and Southern Connecticut gas companies appear to be well along toward achieving Y2K readiness. Their gas distribution systems have little or no software that is date sensitive. Focus has been on remediating or replacing mainframe business systems and replacing SCADA systems that are supervisory control and data acquisition sytems that monitor gas flows and pressures within the distribution system. Contingency plans include back-up power supplies and the manual override of monitoring systems in the event it becomes necessary. All companies are concerned about their main suppliers, including the wholesalers of the gas supplies.

CNG's comments

• All embedded chips have been replaced
• Computer information systems will be Y2K ready in Aug. 1999
• CNG has approximately 200 critical vendors for supplies, services, parts replacement, etc. 100 have not responded to a survey sent by CNG regarding the supplier's Y2K readiness.

Yankee Gas

• Currently in the remediation and testing phase
• Mainframe administrative systems are done. Accounting, payroll, etc.
• Installing a new Customer Information System. Scheduled for completion in April, 1999
• A new system that controls the flow of gas is in the testing phase

Southern Gas

• Distribution process has no software that is date sensitive
• Will be fully compliant in next 2 months
• Currently developing contingency plans
• If electricity or telecommunications systems fail employees can override valves that are controlled by monitoring devices

Major telecommunications carriers doing business in Connecticut

Telecommunications companies appear to be well along in replacement or remediation for Y2K. SNET says that, under a worst case scenerio, call processing will be unaffected. There may be impacts on internal operations and administrative functions. Sprint says that voice and data transmission is not date and time sensitive. SNET's and Sprint's comments are likely to hold true for the other telecommunications companies as well.

SNET'S comments

• Information Technology Systems status - 95% of IT systems have been converted - Extensive testing has been completed - Continuing to test in 1999
• Network status - 90% of switch upgrades have been completed - Remaining will be completed in 1st qtr. of 1999
• Call processing will not be affected, even under the worst scenerio
• 911 system has completed testing

Sprint's comments

• Sprint's most critical applications, including the Sprint network and systems which execute primary business processes, such as service assurance, access management service delivery, customer service and billing are targeted for compliance by 6/99
• Voice and data transmission is not date and time dependent
• Contingency plans will be completed in 1st quarter of 1999

MCI's comments

• MCI has targeted Y2K compliance for mission critical systems, including network and customer interfacing systems by March 31, 1999. Remaining systems are targeted for no later than Sept. 30th

AT&T's comments

• AT&T has achieved the level of 95% compliance by the end of 1998

Cable industry in Connecticut

A representitive from NECTA (New England Cable Television Association) spoke on behalf of its members. In terms of providing cable service, their main vulnerability is electric power. Other than that, the addressable boxes that sit on top of the television need to be modified or replaced. The target date for full compliance is July, 1999. Internally, the cable companies' vulnerability is in their administrative software, such as billing.

Water industry in Connecticut

A representative from the Connecticut Water Works Association spoke on behalf of its members, which includes mainly the large and medium size water companies. The water companies' Y2K exposure lies mainly in their administrative systems and within embedded chips in their water treatment processes. Systems' testing is substantially done. The Association is somewhat concerned about the dozens of small water companies' recognition and remediation of the Y2K problem; however, the small companies tend to be far less automated. Water companies have back-up electric generators, but a long-term power outage could pose a severe problem. --------------------------------------------------------------------- Bonnie Camp's Commentary --------------------------------------------------------------------- Hi Steve,

Thanks for sending me this info. The press release we knew about, of course, but the others I hadn't seen. As I've mentioned in my commentarys and on the forum, I look at both what is said, and what is not said. I also look for inconsistencies in any public statements.

With this in mind, I found it very interesting that Mr. Granquist wrote in the first update that "All companies completed an assessment of their applications software, hardware, embedded software and other types of computerized devices in 1997."

Connecticut Light & Power, part of Northeast Utilities Corporation, wrote in their most recently available SEC 10Q for the quarter ending Sept.30, 1998: " The inventory phase, which has been completed, identified all operating and reporting systems which may need to be fixed. During the detailed assessment phase, tests are performed to determine exactly what needs to be done in order to ensure that the systems identified during the inventory phase are able to properly recognize and process the year 2000. The detailed assessment for the majority of the systems, including nuclear, is scheduled to be completed by the end of 1998." (A direct contradiction in dates; I can't speculate on the reason.)

United Illuminating wrote in their 10Q that they had initiated their Y2K project in mid 1997. They said their remediation methodology was Fixed Windowing. (There is some debate about the efficacy of this method.) They also wrote that as of that filing they had identified 362 business processes of which 174 had been verified. Their stated concerns were: "Aside from telecommunications and NEPOOL/ISO concerns, vendor patches releases and/or replacement equipment or software availability pose the most significant risks to the success of the Company's Year 2000 compliance implementation program." They projected the remediation of their critical systems would be complete by March 31, 1999.

Compare these statements by UI to the ones in Mr. Granquist's most recent notes. The number of identified business processes at risk has increased by 12 in the last four months and their projected completion date for mission critical systems has been put forward three months. (So in four months time there has been a three month slippage in the projected completion time for critical systems.) They have gone from 48% of systems verified to 64% of systems verified in that four month time period. (There is only eight months left to finish.)

I was also curious as to why Mr. Granquist did not ascertain these companies' progress in data interfacing with others, as that was a stated area of focus in number 4. of the first update, but was not mentioned at all in the notes.

I'm very pressed for time right now, or I'd check to see if the other mentioned gas utilities have filed 10Q's and if so, what they also said in comparison. I'll try to do that as soon as I can, just out of curiosity.

I never post anything I receive in an e-mail without the express permission of the author. You've given your permission, but the original mail is from Mr. Granquist. If he has given you permission to post the information, or if you know it is already on a public site, then it would be appropriate for you to post it to the forum. I would make the same comments there that I have written to you.

The statement that 100 (half) of CNG's critical suppliers have not evenresponded to their requests for information I also found to be an area of great concern. A handful of suppliers you might be able to find substitutes for in the time remaining, but a full half of critical suppliers of unknown status is a huge liability from my perspective.

Sorry I didn't have time to explore this more fully in this letter, but at least you have some of my initial thoughts to ponder. Have to go out to a meeting now.

All best wishes to you!

Bonnie



-- Anonymous, February 20, 1999

Answers

Steve/Bonnie - thank you very much for this important information and analysis. There is another wildcard in the deck affected Connecticut Natural gas:

Football.

For reasons that apparently make sense to someone other than myself, the city of Hartford has made a deal with the New England Patriots to relocate to Hartford, CT. A new stadium is due to be completed by (I believe) 2002, with construction to begin in the summer of 1999.

How is this related you may ask?

The corporate headquarters for Connecticut Natural Gas is in the way has to be moved. So does the Steam Plant supplying heat to most of the downtown area.

Perhaps it's because I tend to everything in terms of Y2K, but the whole project has a very surreal feel to it. I keep expecting to hear a Rod Serling voice-over.

I wonder (he asked, his voice heavy with sarcasm...),how moving a corporate headquarters wil effect their Y2K progress?

-- Anonymous, February 22, 1999

To avoid confusion, readers should be aware that of the three statements by Mr. Granquist which were sent to me (1.Summary Update, 2. the recent News Release, and 3. a Y2K Update) the first Summary Update has not been reproduced here, and some of my comments above are in reference to statements made in that update.

A quick look at Yankee Gas' most recent 10Q filed 2/12/1999, also shows this statement:

"The inventory and risk assessment phase of all non-mainframe systems has been completed as of December 31, 1998. The remediation/replacement and testing phases are scheduled for completion by June 1999."

So while Mr. Granquist's note that Yankee is currently in the remediation/testing phase is accurate, it also didn't mention that they had just entered that phase and gave themselves only six months to complete that replacement and testing.

-- Anonymous, February 22, 1999