Senate Energy, Utilities and Communications Committee
Senate Select Committee on Economic Development
 

Assembly Utilities and Commerce Committee
Assembly Information Technology Committee

Informational Hearing: Year 2000 Problem

April 6, 1999
1:30 p.m. to 5:00 p.m.
State Capitol, Room 3191

Background Paper

Every Y2K nightmare scenario begins with the failure of critical utility systems because the failure of the electric grid makes modern life impossible. Nothing works: Lights go dark, radios go silent, TVs and computers go blank, heaters go cold, refrigerators go warm, gas pumps fail, and commerce ceases. The failure of communications systems results in problems not quite so severe but nevertheless widely disruptive of commerce.

Concern about the ability to ensure delivery of critical services beginning in the year 2000 has prompted governmental efforts at both the federal and state level. Last year, President Clinton created the President’s Council on Year 2000 Conversion to assist state and local governments, as well as the private sector in Y2K preparedness efforts. Industry groups and organizations are also helping in the effort to solve the Y2K technology problem.

The California Public Utilities Commission has ordered public utilities, including electric utilities and telecommunications providers, to provide the Commission with quarterly updates of their efforts to remedy Y2K problems, and to prepare a contingency plan no later than July 1, 1999.

The Chair of the President’s Council on Year 2000 Conversion is cautiously upbeat. He does not foresee a widespread collapse of the country’s power grid or telecommunications system and his cautious optimism is generally reflected in recent opinion polls. A March USA Today/Gallup Poll for the National Science Foundation found that growing awareness of the Y2K threat made people less concerned about a catastrophe but more likely to take action to protect themselves. Today, 21% of those surveyed expect major problems as a result of the Y2K issue, down from 34% three months ago.

Electric Industry

In the electric industry, observers are optimistic about Y2K readiness. The North American Reliability Council (NERC), a non-profit organization formed in 1968 to coordinate the reliability and adequacy of electric systems in North American has taken the lead in preparing the electric industry for Y2K at the request of the federal Department of Energy. According to a January 1999 NERC report, "with more than 44% of mission-critical components tested through November 30, 1998, findings continue to indicate that transition through critical Y2K rollover dates is expected to have minimal impact on electric system operations in North America." A final NERC assessment is due by July 1999. The Edison Electric Institute, the main trade organization of the electric industry, believes that all electric utilities will complete their testing and repair of Y2K problems by June 30, 1999.

As for the electric transmission system, California is uniquely situated because of our recent electric restructuring effort. The California Independent System Operator (ISO), which was created in 1997, has responsibility for transmission grid reliability and its major computer systems were developed to be Y2K compliant.

Electric generation has become competitive, as evidenced by the ownership of many California power plants changing hands in recent months. Most electric power is bought and sold through the California Power Exchange which, like the ISO, is an entity created in 1997. Power plant operation is therefore no longer centrally controlled by the utilities. Further, California often imports power from other states, making California reliant on Y2K compliance by entities outside of California’s jurisdiction. Finally, special consideration should be given to the operation of two nuclear power plants in California, which pose special safety issues.

PG&E reports that it has inventoried its mission-critical systems, has identified faults, and is now in the process of repairing and testing those systems. Southern California Edison reports that it has inventoried all its mission-critical systems and repaired 80% of them by the end of 1998 with a goal of repairing 100% of them by June 1999.

Telecommunications Industry

The telecommunications industry appears to have organized to deal with potential Y2K problems. The Telco Year 2000 Forum (Forum) was created by the nation’s largest local telephone companies, including SBC, the parent of Pacific Bell, and GTE. On March 3, 1999 the Forum announced that after six months of interoperability testing, it remains confident that telephone service will continue without significant disruptions during the year 2000 transition.

The Alliance for Telecommunications Industry Solutions (ATIS) is an organization of local telephone companies, long-distance telephone companies, the wireless industry, and equipment suppliers. In February it conducted an interoperability test, including completion of cellular calls to wireline networks and found no Y2K related anomalies within U.S. interconnected telecommunications networks.

In addition, the Federal Communications Commission has chartered a Network Reliability and Interoperability Council (NRIC). This group, chaired by AT&T Chief Executive Officer Michael Armstrong, is focussing on the interfaces among telephone networks. This month it issued a report saying that the industry has been making good progress on ensuring that their computer systems will function during the year 2000 transition. The NRIC said that more information is needed before the readiness of wireless and foreign telephone service providers can be similarly assured.

However, confidence in the ability of the telecommunications network to function is not universally shared. On March 2, 1999 a U.S. Senate Special Committee on the Year 2000 Technology Problem issued a report warning that telecommunications carriers need to pay more attention to contingency planning and security measures in their Y2K remediation efforts. The report was concerned that the large number of code corrections undertaken by the telephone companies to fix the Y2K problem have increased the possibility of disruptions from the introduction of new errors.