Hi Rick,

I am a Financial Analyst from Australia - have been in the Financial Markets for 22 years. My experience encompasses most level of Financial Markets including Risk Management.

About 15 months ago, I was introduced to Y2K and its possible effects on global markets.

As you would be aware, the global Financial Market has alot of interdependencies associated with it. For example, my industry is probably 99.5% reliant on technology. The technology is then reliant on telecommunications etc, etc. My point is that all these interdependencies rely on electricity for them to function.

A couple of weeks ago, I attended the National Infrastructure of Utilities here in Australia.

The main guy from Energy Australia (a very big Australian supplier of electricity) got up - did his presentation and fielded questions from the audience.

He fielded one of everyone's "pet" questions - "will the lights be on come 1/1/2000?"

The spokesperson from Energy Australia responded with what seemed to be a very stock standard answer being:

"Industry is confident that systems will continue to supply electricity without interruption due to a Y2K problem."

I thought it was interesting that he read this comment directly and word for word from a piece of paper, as if he was told by someone (probably his legal guys)to say exactly this response to this sort of question.

I am very mindful of the spin out there, and I don't want to jump to any false conclusions either, but it seemed abit contrived.

Is there anything wrong with the answer given Rick? Can you assist me?

Kind regards

Dorian

-- Anonymous, September 13, 1999

Answers

Dorian,

Thanks for that post from Australia. It looks like you are getting exactly the same approach down there that we are here in the US. I have noted in the past year that power companies in Australia have made some pretty puffed up statements. At one point, last year, I think it was Victoria power that said they had everything important finished and were ready. Then later, an audit disclosed that the press statement was false optimism. I am sure you will get some comments from either Bonnie or Rick, as well as others, I hope. In the meantime, my own personal opinion is that the facts are being kept quiet, and there is nowhere near the confidence within the power companies down there that is publicly stated. Have some contingency plans for your own personal needs. As long as we have started this thread now, could you tell us what the financial, investment, community is saying about the coming rollover in Australia? As you may be aware, here in the US the official position is "Don't worry, keep investing, same as usual."

-- Anonymous, September 14, 1999

dorian,

it would appear to me that the only difference between your industry spokesman and ours is the amount of time that and effort they put into their delivery.

ours are capable of waxing ad nauseum on the subject but the bottom line is they are all saying about the same thing... nothing of import.

i will admit though... ours appear to be a bit more extemporaneous and i have not really noticed that they are reading short statements from prepared text.

last week we had a "community conversation" in our area. these are the community meetings being held all over the country on the advice of koskinen, clinton's point man for y2k in our country.

it was abysmal... the spin was nonstop and one was left to wonder, why, if nothing is going to happen, are we even having these exercises in illusion?

as i live on the edge of 2 counties there were representatives from ppl and gpu[although gpu sold their generation plants they spoke for all.] the man from ppl boldly announced to one and all, and the tv cameras, that they were y2k compliant and had remediated 7,000,000 lines of code.

if you have been following this forum for any length of time you will understand the validity of his statement... this was delivered in a rather pompous and condescending fashion to the audience all the while assuring one and all that there is *nothing* to worry about.

the guy from gpu was not much better and was unable to answer my rather pointed question on the edg's. he said that he would contact the one's "in the know" and get back to whomever asked the question.

the way that they maintained control of the whole event was by limiting the questions to those submitted on paper... they then chose from the submitted questions those that they deemed fit for response in the alloted time.

out of the nine questions i submitted... one was addressed and not answered.

one thing that struck me as odd was the comment from a government spokesman regarding the interruption of food deliveries... he told those assembled not to worry the federal government had plenty of food in reserve.

as we were only allowed to ask questions via the submission of a piece of paper this comment went unchallenged. what type of food is in reserve, how are they planning to deliver it to the great unwashed, and why, if nothing is going to go wrong, have they plans to do so?

so, my advice to you dorian, prepare, prepare, prepare.

never in human history have so many humans blindly trusted that so many other humans won't screw up.

dr.ed yardeni

-- Anonymous, September 14, 1999

Marianne,

Ah yes, it's rather like dropping down that rabbit hole and finding yourself, like Alice, in Wonderland. Why bother to hold a meeting over a non-event, in which all bases are covered, even food and electric? Makes me think of a bunch of folks who are telling themselves and others, not to worry. A simple mailout or newspaper ad could have handled that. And the culling of "sensitive" questions? Makes you wonder who didn't have the "non-sensitive" answers. Fun for the feebleminded, we used to say.

-- Anonymous, September 14, 1999

Durban Metro Electricity in Durban South Africa has a fully committed and adequately funded Year 2000 Project Team.

All critical elements of our business have been identified, rectification where needed has been carried out and satisfactorily tested. Furthermore, approved contingency plans have been developed, tested and are already in place.

ESKOM, our main business partner, has recently assured DME that their own Year 2000 Project is now fully complete. DME is ESKOM's largest customer, and as such we have liaised very closely on a technical level and are privy to their test procedure and test results. Most of the distribution equipment is common to both ESKOM and DME, and our own test results reinforce those results obtained by ESKOM.

DME has taken all reasonable precautions to ensure that Y2K does not impact negatively on its customer base. Therefore, other than the normal business risks encountered while distributing electricity, (violent storms, lightning strikes and falling trees etc.) we do not anticipate any interruption to the electricity supply.

That's our story, told to anyone who enquires. Moreover I personally believe it!

Kind regards..........James Prosser

-- Anonymous, September 14, 1999

Dorian, thanks for checking in - I'm sure you'll receive quite a few responses to your posting.

Let's take kind of a reverse approach to responding to your question. I've found that, for the most part here in the states, the "public relations" approach to speaking about and dealing with Y2k in a public forum was kind of virgin territory for many electric organizations. I think the reason for this can be nailed down to a fairly simply reason: never, in the history of the electric industry, have so many people questioned the ability of our infrastructure providers to continue providing services. Also, more people in the general public seem to have invested a lot of time in understanding the technical issues behind Y2k than in other threats to power supply in the past.

I think this makes a lot of people in the industry (particularly on the PR side of the issue) uncomfortable. They're not used to being questioned on a technical basis. They're used to responding to questions following an outage of some duration...and these questions / concerns usually fade very quickly. Y2k has not faded quickly. To use a weather related analogy, it's like that hurricane or cyclone that just hangs around and hangs around (we had one like that recently on the East coast of the U.S.), toying with us, and making us guess what the impact is going to be. And that is driving both the PR folks and company management folks crazy. It's a tough one to deal with.

One of the reasons that the gentleman was probably reading from a "script" is that the electric industry has seen the need to get out a consistent message. The industry as a whole kind of frowns on one of it's member companies going "off message", so to speak. We had one company here in the U.S. kind of do that last year, and they took some degree of heat from both within and outside of the industry.

Was the statement "contrived"? It depends on your definition of "contrived". It sounds like the response was certainly developed in advanced, and that there was the need for the gentleman to avoid varying from the scripted response - to the point that he couldn't address the question off the top of his head and had to consult the script.

Or maybe the gent simply wasn't comfortable speaking in front of a crowd, and had written down some proposed responses to questions he thought would be raised during the meeting so he wouldn't forget to touch all of the highlights. I freely admit that, as a speaker, I use this approach myself sometimes.

The bottom line is that you need to dig deeper than the superficial statement. Certainly, being in the financial industry, you might have access to public financial records of publicly held Australian electric companies. Here in the states, publicly held companies are required to disclose Y2k efforts in their quarterly financial statements. That would be the best place to start.

There's a lot of spin out there, but like many things in life, if you follow the money trail, you'll typically get pretty close to the best answer that you can about any situation, Y2k or otherwise.

-- Anonymous, September 14, 1999

I love professional analysts. They're used to the concept of interconnections and watching the seemingly tiny variances which might create ripple effects with difficult to predict consequences. And they still tackle trying to foretell what some of those effects might be. (Natural born chaoticians, you might say.)

Dorian, I think you're right that the statement, "Industry is confident that systems will continue to supply electricity without interruption due to a Y2K problem," was probably formulated by a legal department. While it gets across a "'we're good to go" message, it's also complete with words which have variable interpretations in the event something does go wrong at rollover.

For instance, "confident" can mean "our best guess with the information we have right now". Which is fine but does not necessarily indicate the extent of the information they have. (How much testing done? Vendor certifications taken without independent verification or not? Integrated testing done? Telecom connections certified? Building heating, AC, and security systems checked?)

The "due to a Y2K problem" is also dependent on how they define a Y2K problem. We've already seen companies who do NOT consider any immediate or lingering problems due to upgrading systems to be a Y2K problem. Even if the system was upgraded because of Y2K. Would fuel supply problems, telecommunications problems, people with a destructive millennia agenda be considered a Y2K problem or not?

Finally, of course, "confident" does not mean sure. Our U.S. electric industry has also expressed confidence, but this was brought into focus in an NRC Daily Incident Report dated 09/08/99 from the Turkey Point plant in Florida. Here is a copy of the Event Text, including an update:

BOTH UNITS EXPERIENCED A TEMPORARY LOSS OF THE EMERGENCY RESPONSE DATA SYSTEM. "DISCOVERED @ 2230 ERDADS AND ERDS STOPPED UPDATING DATA @ 2200. ERDS CALLED OUT OF SERVICE AND TROUBLESHOOTING UNDERWAY TO DETERMINE CAUSE. UNKNOWN AT THIS TIME IF FAILURE ASSOCIATED WITH Y2K. SYSTEM STARTED UPDATING DUE TO TROUBLESHOOTING ACTIVITIES @ 2305."

THE LICENSEE WILL INFORM THE NRC RESIDENT INSPECTOR.

* * * UPDATE 0313 9/9/1999 FROM DALL'AU TAKEN BY STRANSKY * * *

"ERDS and ERDADS powered and declared functional at 2330 9/8/99. All troubleshooting and testing complete with ERDS and ERDADS declared back in service at 0250 9/9/99. Intermittent disk failures of the primary computer, not any Y2K related failures, were determined to be the cause of the loss of data."

What this shows, is that despite having confidence, those involved obviously thought this ERDS glitch MIGHT have been a Y2K problem before it was discovered it wasn't. And while the loss of monitoring systems/data, if not able to be quickly diagnosed/repaired, might only lead to manual operations being necessary, there are varying industry opinions on how long a time such potential losses would be able to be handled before operations were impacted to the extent that a shutdown might be required. Confidence, yes. Surety that all Y2K problems have been found everywhere in the industry and those it interacts with? No.

I personally think that many utilities do have a handle on the Y2K issue and are confident, with some good reasons to back this confidence if they feel they have had the time and professional resources to do a lot of testing. However, I also think that there will be as many individuals in utilities around the world who will be holding their breath over the rollover and being tense in the days that follow, as there will be customers doing the same thing.

I would be more interested in knowing the extent of a utility's contingency plans, level of staffing, and training/drills in emergency procedures for their employees at this point in time. "Clean" procedures, too. (Making sure no new untested technology or programming is introduced into a remediated system or its connecting systems.) Also what the status is for the telcoms they deal with and either the oil, gas, or coal fuel provider's status, too. (Shipping status in Australia would be at the top of my list of investigation. I lived on a Hawaiian island for a few years in my younger days, and even a minor shipping problem had serious consequences for the island's residents.)

In short, confident is good. Too confident is an invitation for trouble. But since your experience includes Risk Management, you know all about that, huh? For what it's worth, my opinion about Y2K remains the same in one aspect as it has for two years. Y2K = Increased Risk. We won't know for sure how many leaks the Y2K boat has until we float it next year.

-- Anonymous, September 14, 1999

Rick, Thanks for your response.

Every question fielded was answered using no reference notes. It was just this particular question that he referred to his notes. Further, I was privy to a conversation after the forum that involved the main organisers of the forum. They were all slapping each other on the back, proclaiming the forum was a great success. One of the guys turned to the other and said "I thought I spoke really well..what do you think?" I thought I was going to be sick! If I had any doubts of a "spin" out there, my fears were confirmed by this atrocious display of self- praise. Hence my suspicions (which I had anyway)

Unfortunately most public utilities in Australia are not like yours in the US - they are not public, ie. they are not scutinised as your utilities are with the SEC. Financial records etc are not disclosed to the public so my trail is a bit "dusty".

Dorian

-- Anonymous, September 14, 1999

Bonnie,

Your comment: I would be more interested in knowing the extent of a utility's contingency plan" reminds me of a time about 6 months ago when I called the Chief Engineer of our State (NSW) Rail Authority. I asked : What contingency plans do you have if the computer system which routes all the trains goes down either through a computer malfunction or a power outage?

He told me in quite an arrogant tone that everything is totally under control, but wouldn't elaborate. I said if you are so confident that everything is OK, why don't you tell me your contingency plans as you have an obligation to the general public to ensure that the correct message is broadcasted to the greater community. He finally agreed to tell me. Are you ready for this?

"If there is a computer malfunction we have a drawer of red flags that can distributed in case of an emergency"...that's it!!

I had to tell you that story.

Your comment : "confident is good. Too confident is an invitation for trouble" - This was the general feeling amongst attendees. The organisers and speakers were trying so hard to put a positive spin on the Forum they raised people's suspicions - what are they trying to hide? No easy answer unfortunately.

Dorian

-- Anonymous, September 14, 1999

Dorian, This is most definitely a response from a legal department. And He is probably 100% correct. Many of the problems with the power industry will be with fuel supplies and with problems with EDGs(Emergency Diesel Generators) staying up, not with "their" "production" systems. We have gone into a world where the definition of "is" is unknown and we have to live in that world. Semantics is now the Law of the Land, one which many people may die from. The quote you gave. "Industry is confident that systems will continue to supply electricity without interruption due to a Y2K problem." Has absolutely nothing to do with whether you or anyone else will have electricity!!!! It has to do with whether an electricity producer can generate electricity! If you have been on this BBRD you will find that the major problem is not with production of electricity but with the safe distribution of the electricity that is generated. If enough fuel is received, producers can produce electricity, many stations will be able to produce electricity, Hydro, Coal and Nuclear. The question comes in when safety and distribution is factored in. It already appears that safety in Nuclear plants has been jeopardized. That quote does NOT say that there will be power for personal residences, it does not say that the company started remediation in 1995 and has been testing their computer systems and embedded systems for over a year and they have done everything humanly possible to ensure that there will be electricity for the clients. Then again is that their responsibility??? Any company or industry that claims they will have no problem is lying through their teeth. No one knows what will happen!!! No one Here is a quote from the IEEE, the International Electrical Engineers Council to the U.S. Congress. US Senate Y2K Report: "Y2K is not going to be just another 'bump in the road.' No, it's going to be one of the most serious & potentially devastating events the US has ever encountered." These are the people who design computers and their systems and set the standards of those systems. If anyone knows they do.

I now live in Australia and I have come up with about an 85% importation of fuel into Australia. That means that Australia, like the U.S., is dependent on other countries for the survival of their Electric Grid, even though they have enormous energy resources. If Saudi Arabia and Nicaragua have problem with their oil wells or refineries or ports, then people will die in the U.S. The Y2K problem is all about interdependencies Whether that be supply chains, telecom, vendor assurances, airports/radars/navigation aides, banks, gas pumps, trains, shipping/navigation/ports, communication, etc.

Yes it is legal mumbo jumbo.whether the person who stated it knows it is mumbo jumbo is another story.

Mark D. De Vries

-- Anonymous, September 15, 1999