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News Analysis

Fortnightly Magazine - November 1 1998

your completion schedule, which now calls for much work to be done in the last quarter of 1999. What are you doing to move your schedule up to an earlier completion date of May 31, 1999?"

No direct answer was forthcoming. However, Ghent assured Moler that NERC indeed was treating the Millennium Bug as something very special: "It's almost like going to war. We have some drills scheduled [actual simulations] for Sept. 9, 1999. We've never done that before for a contingency."

Progress So Far

For the oil and gas sector, Skip Horvath noted that about two-thirds of the industry, measured in terms of volume, had responded to the group's Y2K survey. About 70 percent of all respondents represented "small" companies with annual revenues under $50 million. Twenty-one percent of responses came from "medium-sized companies (between $50 million and $1 billion in revenues), and 8 percent from billion-dollar-plus firms.

Horvath added that 31 percent of the oil and gas sector respondents reported that they would have a contingency plan ready by December, followed by 73 percent in June 1999 and 100 percent of all responses by December 1999.

The Y2K conversion process can be viewed as occurring in five sequential stages: (1) formulation of a plan, (2) taking an inventory, (3) assessing the scope of needed corrections, (4) remediation, and (5) validation (testing) of remediation efforts. For the oil and gas sector, the FERC report (released Sept. 18, the day of the conference) noted that 45 percent of respondents had completed the assessment stage for business and administrative systems, while a full 60 percent had done so for embedded systems.

The FERC was to publish its next Y2K survey for the oil and gas sector in February 1999. Horvath concluded that the gas and oil industries were now focusing on Y2K problems in operations functions, with most efforts currently in assessment and remediation, but moving toward validation. Added Ron Quiggins, of Shell Oil Co.; "I get a warm and comfy feeling looking at the survey results." But Scott Espenshade, vice president for economics at the Independent Petroleum Association of America, offered a discrete warning: "Our real concern is the smaller companies. They rely on third-party suppliers for their software."

On the electric side, the NERC report recommend an accelerated timetable. NERC asked the industry as a whole to complete its initial inventory and assessment phases by Oct. 31, 1998. It recommended completion of the remediation and testing phases by May 31, 1999.

"Mission critical systems and components are to be made Y2K ready by June 30, 1999, said NERC. These dates are tied to maintenance periods during off-peak seasons in the fall of 1998 and spring of 1999, allowing adequate time for contingency planning and preparations. [But] while many organizations are on track to meet these targets, many others need to accelerate project plans and resources."

At the Houston meeting, NERC's Gerry Cauley, repeated the importance of scheduling work around demand peaks: "The spring of 1999, when plants will be down for scheduled maintenance, will be the critical period."

Overall, the farther