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Are we headed for the big blackout?
Regardless of your own Y2K preparedness, the slow-moving electrical industry could leave you in the dark
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September 8, 1998 by Blaise Zerega |
From...
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(IDG)
-- Companies scrambling to bring their computer systems into year-2000
compliance may discover that their time and effort will be for naught.
A lack of preparedness by North America's electrical industry may pull
the plug on many companies' transition plans.
Although many electric companies have already begun addressing year-2000 compliance, some have not. It was only in June that the first industrywide efforts got under way, which may not leave enough time for testing and contingency planning, according to experts.
"I can't tell you overall how we stand. Based on the information we receive, we'll build contingency plans off that," said Jon Arnold, chief technology officer of the Edison Electric Institute (EEI), a trade organization in Washington that represents companies supplying roughly 75 percent of North America's electricity.
The North American Electric Reliability Council (NERC) will present the first industry report on year-2000 readiness to the Department of Energy (DOE) on Sept. 14, with public release slated for Sept. 17. Until the publication of this report, serious questions about the capability of power companies to generate, transmit, and distribute electric power -- and the consequences for IT system and business disruptions -- will abound.
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Industry experts point to the electric system's interconnectedness as the potential source of most problems. North America is divided into three interconnected power grids, which are made up of electric generating, transmitting, and distribution companies. These thousands of companies compose a high-level network that is only as strong as its weakest segment.
"If you have a failure in one place, it can affect the power delivery in many places," said Stephanie Moore, an analyst at the Giga Information Group, a research company in Westport, Conn.
The risk posed by interconnectedness is made worse by deregulation. For example, a California company purchasing power from a Tennessee company may not receive it because of a transmission problem in Kansas.
Unfortunately, companies have very few alternative power options, analysts say. Large companies should investigate on-site power generation, largely from generators, while small companies with limited resources might resort to candles and a return to paper -- until power is restored and IT systems brought back up.
"The truth is, I don't have any good advice," said Rick Cowles, director of industry year-2000 solutions at Tava Technologies, in Penn's Grove, N.J.
Many companies have been slow to tackle the year-2000 risks of their power supply, concentrating instead on their internal computing systems, analysts said.
A large Fortune 200 manufacturer in the Midwest is taking this risk seriously, but has yet to cement a plan to manage the risk. The manufacturer has more than 50 worldwide locations and is urging its local facilities to contact their electricity suppliers immediately.
"As we start to develop insight to what those providers are capable of, we'll draw that into business continuity and contingency planning," the manufacturer's year-2000 project leader said.
Other companies such as credit card provider Household International will use in-house resources to meet the possibility of power disruption.
"All our major facilities are being prepared to handle any external or internal failure, [by] having back-up generator and back-up diesel capability," said Thomas Wilkie, Household International's director of risk management, in Prospect Heights, Ill.
For now, companies have to wait while the electric power industry as a whole undertakes the critical steps of gaining and sharing information.
"We can't answer questions on preparedness at this point," said Gene Gorzelnik, director of communications at NERC, in Princeton, N.J.
NERC is compiling results of questionnaires sent in June to the 200 largest North American power companies, and to four trade associations representing 3,000 distribution companies. Results will be included in the industry report delivered to the DOE in September. NERC will follow the report with a coordination of preparedness plans and scenario analysis ending in July 1999, and a coordination of precautionary operations during the year-2000 transition.
Although NERC and the EEI expect the September DOE report to be positive generally, it is not clear whether "mom and pop" distributors or large electric utilities -- generally thought to be more vulnerable -- present a greater risk.
"In a lot of cases, you can't make the assumption that mom and pops are going to be the problem, because the larger companies tend to have a lot of automation," the EEI's Arnold said.
Another risk in need of assessment is the nuclear power industry. According to the Nuclear Energy Institute, a trade organization in Washington, the United States depends on nuclear power to generate 22 percent of its electricity.
"You can't talk about [year 2000] and electricity without including the nuclear power industry," Cowles said.
In June, the Nuclear Regulatory Commission (NRC) sent a letter the 108 U.S. nuclear power plants advising the industry of year-2000 risks and requesting a detailed written statement of readiness by July 1, 1999.
Much like the NERC effort, the NRC information-gathering is a good first step, but one that leaves companies considering contingency plans in limbo.
"My advice is wait for the [industry] reports and strike up a dialogue with your utility at the local level," Arnold said.
Walking the high wire
Dark spots in the electrical industry's Y2K readiness
- Interconnectedness - Large sections of North America's power grid can be disrupted by a single outage somewhere on the network.
- Nuclear power - It is unclear whether nuclear power plants, which generate 22 percent of U.S. electricity, can operate in regulatory compliance during 2000.
- Automation - Power distribution is controlled by computerized "war rooms" with hundreds of custom-written applications, many of which may be year-2000 noncompliant.
- Deregulation - To compete, many power companies have cut prices and lowered their profit margins, leaving little money to spend on extra staffing and extra capacity.