I'm most interested in some intelligent interpretations of the following. Because of my own computer problems, I may have lost this utility's September 1998 10-q filing, which predicted the possibility of "disruptions and power outages." Could so much have been accomplished in such a short period of time? (FYI: I'm posting this, because I'm still debating about whether to buy a generator. I'm interested in your comments on that as well. Also--if you feel the need to flame me about posting this--please do so gently. Thanks!)

10-q February from DTE (Detroit Edison)

YEAR 2000

The Company and Detroit Edison have been involved in an enterprise-wide program to address Year 2000 issues. A program office was established in mid-1997 to implement a rigorous plan to address the impact of Year 2000 on hardware and software systems, embedded systems (which include microprocessors used in the production and control of electric power), and critical service providers. The emphasis has been on mission critical systems that support core business activities or processes. Core business activities/processes include safety, environmental and regulatory compliance, product production and delivery,revenue collection, employee and supplier payment and financial asset management.

The plan for addressing Year 2000 is divided into several phases including raising general awareness of Year 2000 throughout the Company and Detroit Edison; maintaining an inventory of systems and devices; performing an assessment of inventoried systems and devices; performing compliance testing of suspect systems and devices; remediation of non-compliant systems and devices through replacement, repair, retirement, or identifying an acceptable work around; testing and remediation of systems and devices in an integrated environment and preparing business continuity plans.

Inventory, assessment and compliance testing phases have been completed for known systems and devices. The remediation phase is approximately 80% complete and is expected to be fully complete by August 1999 for mission critical assets and supporting assets. Integration planning, including the mapping of critical business processes, is near completion for Detroit Edison. Integration testing and remediation is expected to be complete by October 1999.

To support the program phases, the program office has been working with major utility industry associations and organizations, customers and vendors to gather and share information on Year 2000 issues. The program office has contacted vendors critical to Company operations to determine their progress on Year 2000.

To further assist in identifying potential problems, tests of generating facilities have been conducted by advancing control systems dates to the Year 2000. Results of these tests have shown that the generating facilities operated successfully in this induced "millennium mode." Exercises were conducted on December 31, 1998 and January 1, 1999 to assess the ability to reach employees and the regional security centers of the East Central Area Reliability Group through various communication channels. The exercised communication channels operated properly. The business continuity program will provide opportunities to conduct similar exercises on other systems in advance of the Year 2000. Similar analysis has not been completed for other affiliates.

In the event that an unknown Year 2000 condition adversely affects service to customers or an internal business process, contingency and business continuity plans and procedures are being developed to provide rapid restoration to normal conditions.

The Company and Detroit Edison have always maintained a comprehensive operational emergency response plan. The business continuity function of the Year 2000 program will supplement the existing emergency plan to include Year 2000 specific events. A Year 2000 emergency response office will be fully operational by November 1999 to manage and coordinate operations, including mobilization of all employees as necessary, during the transition to the new millennium.

The Company and Detroit Edison believe that with all Year 2000 modifications, business continuity and emergency management plans in place, the Year 2000 will not have a material effect on their financial position, liquidity and results of operations. Despite all efforts, there can be no assurances that Year 2000 issues can be totally eliminated. Results of modifications and testing done during the fourth quarter of 1998 have demonstrated that Detroit Edison should be able to maintain normal operating conditions into the Year 2000, although there may be isolated electric service interruptions. Detroit Edison's internal business systems may be affected by a Year 2000 related failure that could temporarily interrupt the ability to communicate with customers, collect revenue, or complete cash transactions. In addition, no assurances can be given that the systems of vendors, interconnected utilities and customers will not result in Year 2000 problems.

The Company estimates that Year 2000 costs will approximate $80 million with $39 million expended between January 1, 1998 and December 31, 1998. Operating cash flow is expected to be sufficient to pay Year 2000 modification costs with no material impact on operating results or cash flows.

-- Anonymous, March 13, 1999

Answers

I think this is a good summation of their program, and certainly describes some of the hoops that they're jumping through to get through this thing sucessfully. While the statement doesn't get down to the technical details of the program, it is sufficiently explicit to give me a feeling that they at least know what they're doing, and what they have yet to accomplish.

However, as you note, there's quite a few legally induced "weasel words" contained within the 10Q statement. Let's be fair, though - every company is sticking those types of words in financial filings. It would be imprudent (from a fiduciary responsiblity standpoint) to do otherwise.

-- Anonymous, March 13, 1999

Thanks Rick. I appreciate your response to my post and your opinions.

-- Anonymous, March 14, 1999