Year 2000 Computing Crisis: Readiness of the Electric Power Industry
(Letter Report, 04/06/99, GAO/AIMD-99-114).

Pursuant to a congressional request, GAO reviewed the electric power
industry's vulnerability to year 2000 problems and the reported status
of the industry's year 2000 readiness.

GAO noted that: (1) all phases of operations in the electric power
industry--from generation to distribution--use control systems and
equipment that are subject to year 2000 failures; (2) while the electric
power industry has reported that it has made substantial progress in
making its equipment and systems ready to continue operations into the
year 2000, significant risks remain; (3) in response to a November 1998
industry-wide survey, the nation's electric power utilities reported
that, on average, they were 44 percent complete with remediation and
testing; and (4) however, almost half of the reporting organizations
said that they did not expect to be year 2000 ready within the June 1999
industry target date, and about one sixth of the respondents indicated
they would not be ready until the last 3 months of 1999--leaving little
time margin for resolving unexpected problems.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-99-114
     TITLE:  Year 2000 Computing Crisis: Readiness of the Electric Power 
             Industry
      DATE:  04/06/99
   SUBJECT:  Y2K
             Systems conversions
             Electric utilities
             Strategic information systems planning
             Computer software verification and validation
             Electric power generation
             Information resources management
IDENTIFIER:  Y2K
             
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covers.book GAO United States General Accounting Office

Report to the Committee on the Year 2000 Technology Problem, U. S.
Senate

April 1999 YEAR 2000 COMPUTING CRISIS

Readiness of the Electric Power Industry




GAO/AIMD-99-114

  GAO/AIMD-99-114

United States General Accounting Office Washington, D. C. 20548
Lett er

Page 1 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

GAO

Accounting and Information Management Division

B-280845 Letter April 6, 1999 The Honorable Robert F. Bennett
Chairman The Honorable Christopher Dodd Vice Chairman Special
Committee on the

Year 2000 Technology Problem United States Senate

A continuous, adequate supply of electric power as we move into
the next century is critical for our national economy and the
safety and well being of the public. At your request, we
identified the electric power industry's vulnerability to Year
2000 problems and the reported status of Year 2000 readiness. On
February 22, 1999, we briefed your office on the results of our
work. The briefing slides are included in appendix I.

This report provides a high- level summary of the information
presented at that briefing, including background information, the
Year 2000 vulnerabilities, and the reported readiness status of
the electric power industry. This report also presents the
suggestions we made to the

Department of Energy and the Nuclear Regulatory Commission
concerning actions to (1) reduce the risk that a number of
entities generating, transmitting, or distributing electric power
will not meet the June 1999 industry Year 2000 readiness milestone
and to (2) ensure that utility customers have adequate information
about the risks of power outages in their service area.

Result in Brief All phases of operations in the electric power
industry-- from generation to distribution-- use control systems
and equipment that are subject to Year

2000 failures. While the electric power industry has reported that
it has made substantial progress in making its equipment and
systems ready to continue operations into the Year 2000,
significant risks remain. In response to a November 1998 industry-
wide survey, the nation's electric power utilities reported that,
on average, they were 44 percent complete with remediation and
testing. However, almost half of the reporting organizations said
that they did not expect to be Year 2000 ready within the June
1999 industry target date, and about one sixth of the respondents
indicated they would not be ready until the last 3 months of 1999
leaving little time margin for resolving unexpected problems.

B-280845 Page 2 GAO/AIMD-99-114 Year 2000 Readiness of the
Electric Power Industry

Background The United States electric power industry comprises
about 3, 200 electric utilities, with about 700 of the utilities
operating power generation

facilities. 1 Some utilities are exclusively transmission or
distribution entities-- utilities that purchase wholesale power
from others to distribute, over their own transmission and
distribution lines, to individual customers. In North America,
there are 136 control areas 2 responsible for coordinating the
generating, transmission, and distribution activity within their
specific geographic areas. A control area is the basic operating
unit of the electric power industry. Each control area manages its
generation to meet electricity demand and fulfill exchange
obligations. They must be in direct control of their transmission
systems and generators to continuously balance power supply with
demand in order to meet customer needs and

prevent damage to equipment. The control areas in the continental
United States, Canada, and a small area in northern Mexico are
part of three interconnected grids. For these grids, the North
American Electric Reliability Council (NERC) sets the operating
and engineering standards for reliability.

Electric Industry Is Vulnerable to Year 2000 Failures

The industry is dependent on computer control systems and embedded
systems that are susceptible to Year 2000 failures. The industry's
analysis of its embedded systems has shown that the Year 2000
problem places the

nation's electric power systems at risk. Because of the high
voltages used in the transmission of electric power, and the speed
at which an electrical disturbance can cascade through the system,
the security 3 of the system is maintained through an extensive
network of automatic protection devices.

These devices, including circuit breakers and relays, are usually
centrally monitored and controlled by computer systems generally
known as supervisory control and data acquisition (SCADA) systems.

1 This excludes nonutilities-- privately owned entities that
generate power for their own use and/ or for sale to utilities and
others. 2 In addition to the 136 control, areas there are about 64
operating centers sharing responsibility for the monitoring and
control of the bulk electric power systems in the North America.

3 System security is defined as the ability of the electric system
to withstand sudden disturbances such as electric short circuits
or unanticipated loss of system elements.

B-280845 Page 3 GAO/AIMD-99-114 Year 2000 Readiness of the
Electric Power Industry

Virtually all of the SCADA systems and many of the devices use
embedded microprocessors and systems that may have, or are known
to have, Year 2000 problems. All phases of operations-- from
generation to distribution- use

control systems and equipment that are subject to Year 2000
failures. Resolution of Year 2000 problems in control systems and
equipment used in the electric power industry is essential for a
dependable supply of electricity necessary for transportation,
industrial operations, home

heating, and other activities that affect our daily lives. The
President's Council on Year 2000 Conversion-- working with the
Department of Energy and with industry associations led by NERC--
is assessing industry's progress in addressing Year 2000 issues.
This is consistent with recommendations that we made to the
President's Council in April 1998 to institute a sector based
approach with needed public/ private partnerships

and to make assessments of industry readiness. 4 Progress in Year
2000 Readiness But Risks Remain

The electric power industry has made substantial progress in
making its equipment and systems ready to continue operations into
the Year 2000, but significant risks remain. In January 1999, NERC
reported the findings of its

November 1998 survey, with about 98 percent of the electricity
supply and delivery organizations participating in the assessment
process. The survey respondents reported that on average they were
44 percent complete with remediation and testing. About half of
the reporting organizations said that they expected to be Year
2000 ready within the June 1999 industry target

date. About 46 percent of the bulk power entities reported to NERC
that they expect to miss the industry Year 2000 readiness target
date of June 1999. This 46 percent includes 16 percent that are
not expected to be ready until the 4 th quarter of 1999. In
addition, 20 nuclear power plants reported that they would not
meet the industry Year 2000 readiness milestone of June

1999. NERC, concerned about the slow pace of the Year 2000 effort,
plans to more closely monitor the status of those facilities that
may be at risk of failure and increase its supervisory activities.
In addition, its regional 4 Year 2000 Computing Crisis: Potential
for Widespread Disruption Calls for Strong Leadership and
Partnerships (GAO/AIMD-98-85, April 30, 1998).

B-280845 Page 4 GAO/AIMD-99-114 Year 2000 Readiness of the
Electric Power Industry

councils plan to coordinate drills to ensure that personnel and
systems are ready for operations during the Year 2000 transition.

Federal organizations engaged in power production and transmission
reported similar Year 2000 status for their facilities. Energy's
power marketing administrations reported that they will be Year
2000 ready within the industry target date; the Corps of Engineers
in the 3 rd quarter of 1999;

and the Bureau of Reclamation and the Tennessee Valley Authority
in the 4th quarter of 1999.

Suggested Actions As discussed in the briefing, in order to reduce
the risk that a number of entities generating, transmitting, or
distributing electric power will not meet the June 1999 Year 2000
readiness milestone, and to ensure that utility customers have
adequate information about the risk of power outages in

their service areas, on February 19, 1999, we met with Department
of Energy officials and suggested that they:

 Work with the Electric Power Working Group to ensure that
remediation activities are accelerated for the utilities that
expect to miss the June 1999 deadline for achieving Year 2000
readiness. This would include revising outage schedules to perform
renovations prior to the industry target date, where feasible, and
adding resources if necessary to accelerate progress.

 Encourage state regulatory utility commissions to require a full
public disclosure of Year 2000 readiness status of entities
transmitting and distributing electric power-- including 136
control areas and the 3, 000 entities operating North America's
distribution systems. Such disclosure should include the current
readiness status, the projected date that readiness will be
achieved, descriptions of the probable and worst case scenarios,
and a public version of contingency plans.

In response to our suggestions, an Energy official said that the
department agrees with the suggested actions in general. However,
he noted that the department would probably not pursue the
acceleration of schedules for those organizations whose systems
are substantially ready except for a

small amount of work. Concerning the dissemination of readiness
status information, he said that Energy plans to coordinate the
issue of public disclosure with state regulatory agencies. As
discussed in the briefing, to help ensure that all licensed
nuclear power plants will identify and rectify any Year 2000
problems with their computer

B-280845 Page 5 GAO/AIMD-99-114 Year 2000 Readiness of the
Electric Power Industry

systems well before January 1, 2000, and that the public and the
electric power industry is given adequate information about the
Year 2000 readiness status of individual nuclear power plants, on
February 12, 1999, we suggested that Nuclear Regulatory Commission
(NRC):

 In cooperation with the Nuclear Energy Institute, work with the
nuclear power plant licensees to accelerate the Year 2000
remediation efforts among the nuclear power plants that expect to
miss the June 1999 deadline for achieving Year 2000 readiness.
This would include revising outage schedules to perform
renovations prior to the industry target date.  Publicly disclose
the Year 2000 readiness status of each of the nation's

operational nuclear reactors. The disclosure should include the
date when each nuclear power plant is expected to be Year 2000
ready. NRC officials stated that nuclear power licensees are
required to report their Year 2000 readiness status on July 1,
1999. NRC plans to focus its efforts on nuclear power plants that
may miss the July 1, 1999 milestone.

NRC officials told us that NRC would release the information on
the Year 2000 readiness of individual nuclear power plants in July
1999. Objectives, Scope, and Methodology

As requested, our objectives were to identify the electric power
industry's vulnerability to Year 2000 problems and the reported
status of Year 2000 readiness. To identify Year 2000
vulnerabilities in the industry, we reviewed federal agency and
industry associations' publications on the structure of the
industry, and the use of date dependent embedded systems in the
technical infrastructure. We also visited selected electric
utilities and

federal power generating and marketing agencies to obtain
information about the extent of embedded systems vulnerabilities.

To identify the reported status of Year 2000 readiness, we
reviewed and analyzed industry survey data collected by the
electric power subgroup of the President's Council on Year 2000
Conversion. Because of the large volume of the survey respondents
and our limited access to source data, we did not validate the
accuracy of reported information. We conducted our work at the
Departments of Energy, the Interior, and Defense; the Federal
Energy Regulatory Commission; the Nuclear Regulatory Commission;
the Tennessee Valley Authority; selected electric utilities; and

five electric power industry associations that conducted surveys
for the electric power subgroup of the President's Council. We
performed our

B-280845 Page 6 GAO/AIMD-99-114 Year 2000 Readiness of the
Electric Power Industry

work from August 1998 through February 1999, in accordance with
generally accepted government auditing standards. We provided a
copy of our briefing materials, which were used in preparing this
report, to the Department of Energy officials representing the
electric power working group of the President's Council on Year
2000 Conversion.

The Director, Office of Economic, Electricity, and Natural Gas
Analysis of the Department of Energy gave us oral comments on the
briefing. We have incorporated them as appropriate throughout this
report. We have also provided copies of industry- wide findings to
NERC, and copies of agencyrelated findings to key officials at
Bureau of Reclamation, Army Corps of Engineers, Tennessee Valley
Authority, Bonneville Power Administration, Southeastern Power
Administration, Southwestern Power Administration,

and Western Area Power Administration. We responded to their
questions on these materials. As agreed with your office, unless
you publicly announce the contents of this report earlier, we will
not distribute it until 30 days from its date. At that time, we
will send copies to John Koskinen, Chairman of the President's
Council on Year 2000 Conversion; The Honorable Bruce Babbitt,
Secretary of the Interior, The Honorable Bill Richardson,
Secretary of Energy; Lt. Gen. Joe N. Ballard, Chief of Engineers
and Commander, Army Corps of Engineers; Judi Johansen,
Administrator, Bonneville Power Administration; The Honorable
Shirley Jackson, Chairman, Nuclear

Regulatory Commission; Craven Crowell, Chairman, Tennessee Valley
Authority; The Honorable Jacob J. Lew, Director, Office of
Management and Budget; and other interested parties. Copies will
also be made available to others upon request.

We appreciate the help and cooperation extended to our audit team
by leading industry associations-- the North American Electric
Reliability Council; the Edison Electric Institute; the American
Public Power Association; and the National Rural Electric
Cooperative Association. We would also like to express our
appreciation to the following electric power

companies: the Consolidated Edison Company of New York, New York;
Easton Utilities, Easton, Maryland; Virginia Power, Surrey Power
Station, Virginia; and the Los Angeles Department of Water and
Power, Los Angeles, California.

If you have any questions on matters discussed in this letter,
please call me at (202) 512- 6253, or Mirko J. Dolak, Technical
Assistant Director, at (202)

B-280845 Page 7 GAO/AIMD-99-114 Year 2000 Readiness of the
Electric Power Industry

512- 6362; or James R. Hamilton, Assistant Director, at (202) 512-
6271. Other major contributors to this report are listed in
appendix II.

Joel C. Willemssen Director, Civil Agencies Information Systems

Page 8 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

Appendix I Briefing on Electric Power Industry Year 2000 Readiness
Appendi x I

GAO Year 2000 Readiness Briefing for Senate Special Committee on
the Year 2000

Technology Problem on Electric Power Industry

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 9 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

2

GAO Purpose Purpose of briefing is to provide the results of our
review of the Year 2000 readiness of the electric power industry.
We will present

 Objectives, scope, and methodology Background  Year 2000
vulnerability  Federal and industry efforts to assess Year 2000
status  Year 2000 readiness of electric power industry  Year 2000
readiness of federal electric power organizations  Suggested
actions

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 10 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

3

GAO Objectives The review objectives were to identify  Year 2000
vulnerabilities in the electric power industry and  the status of
Year 2000 Readiness.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 11 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

4

GAO Scope and Methodology In assessing the domestic electric power
industry's vulnerability to Year 2000 problems, we surveyed an
extensive body of technical literature and industry journals,
searched and reviewed related documents from the Internet,
reviewed federal agency and industry publications on the structure
of the industry, and visited selected federal and private sector
organizations that generate, transmit, and distribute electric
power.

To identify the status of Year 2000 readiness, we reviewed and
analyzed industry survey data collected by the electric power
subgroup of the President's Council on Year 2000 Conversion, and
Year 2000 program status data provided by federal organizations
generating or marketing electric power.

Because of the large volume of the survey respondents and our
limited access to private sector source data, we did not validate
the accuracy of reported information.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 12 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

5

GAO Scope and Methodology (cont'd) In the federal sector we
conducted our work at

 Department of Energy;  Department of the Interior;  Department of
Defense;  Federal Energy Regulatory Commission;  Nuclear
Regulatory Commission;  Tennessee Valley Authority, Chattanooga,
Tennessee;  Bonneville Power Administration, Portland, Oregon;
Western Area Power Administration, Denver, Colorado; and  Army
Corps of Engineers, Washington DC and Portland, Oregon;

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 13 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

6

GAO Scope and Methodology (cont'd) In the private sector, we
conducted our work at

 North American Electric Reliability Council;  Edison Electric
Institute;  American Public Power Association;  National Rural
Electric Cooperative Association;  Nuclear Energy Institute;
Consolidated Edison Company of New York, New York;  Easton
Utilities, Easton, Maryland;  Virginia Power, Surry Power Station,
Virginia; and  Los Angeles Water and Power, Los Angeles,
California.

We performed our work from August 1998 through February 1999, in
accordance with generally accepted government auditing standards.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 14 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

7

GAO Background - Ownership of Electric Utilities  The United
States electric power

industry is comprised of about 3, 200 electric utilities, with
about 700 utilities operating power generation facilities.

 There are four types of utilities:

 244 investor- owned,

 7 federal,

 2,014 publicly- owned, and

 931 cooperatives. Existing Generating Capacity by

Type of Utility, 1997

Federal 9% Investor owned 74% Cooperative 4%

Publicly owned 12% Other 1%

Source: Energy Information Administration, Department of Energy

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 15 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

8

GAO Background - Primary Energy Sources  In 1997, the reported
capacity of U. S.

utilities totaled about 710, 000 megawatts.

 Primary energy sources:

 43% Coal- fired

 19% Gas- fired

 14% Nuclear

 13% Hydroelectric

 10% Petroleum

 1% Other

Hydroelectric Power Plant

Nuclear Power Plant

Fossil Fuel Power Plant

Nuclear, coal- fired, and hydroelectric power plants Tennessee
Valley Authority

Source: Tennessee Valley Authority

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 16 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

9

GAO Background - Electric Grid Structure  The North American
Electric Reliability Council (NERC) sets the

operating and engineering standards for the reliability of
electric systems in North America

 NERC is a voluntary not- for- profit organization made up of 10
Regional Reliability Councils. NERC and its regions account for
nearly every bulk electric supply and delivery organization in the
three Interconnections of North America

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 17 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

10

GAO Background - Electric Grid Structure (cont'd)  The electric
systems in North

America are connected into three major grids or Interconnections.

 Each Interconnection contains a number of control areas. There
are 136 control areas in North America. The Three NERC

Interconnections in North America

Western Interconnection

ERCOT Interconnection

Eastern Interconnection

Source: NERC.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 18 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

11

GAO Background - Electric Grid Structure (cont'd)  In North
America, the

coordination of generating, transmission, and distribution
activity within a specific geographic area is implemented through
the 136 control areas.

 Each control area must be in direct control of its transmission
systems and generators to continuously balance power supply with
demand. Nuclear power

Fossil fuel power plant Control center Industrial

customer Substation Distribution

systems Distribution

system Substation

Substation Substation Interconnection

Substation Public &

private networks A Simple Control Area

Adapted from: Electric Power Wheeling and Dealing, Office of
Technology Assessment, May 1989.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 19 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

12

GAO Year 2000 Vulnerability The industry is dependent on computer
control systems and embedded systems that are subject to Year 2000
failures.

Control systems include:  Supervisory Control and Data

Acquisition (SCADA),  Automatic Generation Control

(AGC), and  Energy Management Systems

(include SCADA & AGC systems). The control systems manage the grid
and its protective devices, including those with embedded systems.
Utility Control Center with

SCADA Displays and Mapboard

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 20 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

13

GAO Year 2000 Vulnerability - SCADA Systems A simple SCADA System

Power plant generators Transformers Circuit breakers Switches
Reclosers Capacitor bank controllers

Primary computer

Backup computer

Communications interface

Local console controller

Control room mapboard RTU

functions Analog

recorders Digital displays Links to

other computer system( s) Remote consoles Remote loggers status

alarm events sequence diagnostics

trip/ close raise/ lower open/ close

stop/ start Local remote terminal unit (RTU)

Control room operator/ dispatcher Protection

relays Transducers Remote

terminal unit( s)

Adapted from: IEEE Standard Definition, Specification, and
Analysis of Systems Used for Supervisory Control, Data
Acquisition, and Automatic Control, November 1994.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 21 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

14

GAO Year 2000 Vulnerability - Embedded Systems  Embedded systems
are computers

used to monitor or control the operation of devices, machines, or
plants.  In some instances, the embedded

systems contain microprocessors providing timing and calendar
functions. These real time clocks allow the system to manage timed
control sequences, keep track of equipment maintenance events, or
time- stamp system events.  Systems containing real time

clocks may malfunction or experience a total failure. Embedded
Microprocessors in

Protection Relay

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 22 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

15

GAO Year 2000 Vulnerability - Embedded Systems (cont'd)

The electric power industry uses a wide range of embedded devices,
including remote terminal units, protection relays, and
programmable logic controllers.

The embedded devices monitor and control generators, circuit
breakers, switches, and other key elements of the electric grid.

The embedded devices are supervised or controlled by EMS or SCADA
systems. Programmable Logic Controllers

in 500,000 Volt Circuit Breaker

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 23 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

16

GAO Year 2000 Vulnerability - Potential Impacts NERC has
identified a large number of Year 2000- related risk factors that
may impact the operation of electric power systems. The internal
risk factors include generator outages, constrained operation of
nuclear power plants, partial loss of EMS/ SCADA systems, loss of
portions of companyowned data and voice communications, and a
failure of environmental control systems. According to the
assumptions suggested by NERC for contingency planning purposes

 a probable scenario may include 10% to 15% loss of generation,
the loss of wire- based voice and data communications, and the
partial loss of EMS/ SCADA systems.

 a credible worst case scenario might result in area blackout
caused by the long- term loss of generating and control
facilities, and the loss of fuel supplies.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 24 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

17

GAO Federal and Industry Efforts to Assess Year 2000 Status

 The President's Council on Year 2000 Conversion is assessing the
Year 2000 readiness of the nation's infrastructure.

 The President's Council has established an Electric Power Working
Group, led by the Department of Energy, to assess the readiness of
the electric power industry.

 Energy has asked the North American Electric Reliability Council
to assess whether the nation's electric industry is adequately
prepared to address the Year 2000 problem.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 25 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

18

GAO Federal and Industry Efforts to Assess Year 2000 Status
(cont'd)

NERC and industry associations are surveying their members' Y2K
assessment programs.

 NERC - Control Areas and bulk power entities

 EEI - Investor- owned utilities  APPA - municipal utilities
NRECA - Rural cooperatives  NEI - Nuclear power industry  CEA -
Canadian utilities President's Council on

Year 2000 Conversion President's Council on

Year 2000 Conversion

Energy Working Group

Electricity (DOE)

Energy Working Group

Electricity (DOE) NERC NERC  Edison Electric Institute (EEI)
American Public Power Association

(APPA)  National Rural Electric Cooperative

Association (NRECA)  Nuclear Energy Institute (NEI)  Canadian
Electric Association (CEA)

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 26 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

19

GAO Year 2000 Readiness of Electric Power Industry  46 percent of
the reporting bulk power entities,  20 of 66 nuclear power plants,
26 percent of municipal distributors, and  10 percent of
cooperative distributors. While the electric power industry has
made substantial progress in

making its equipment and systems ready to continue operations into
the Year 2000, significant risks remain. According to NERC's
survey, the industry Year 2000 readiness target date of June 1999
is expected to be missed by

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 27 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

20

GAO Reported Year 2000 Readiness of Electric Power Industry -
Control Areas and Bulk Power Utilities

Average percent completed Inventory

Assessment Remediation/ testing

28% 65%

87% 44%

82% 96%

0% 20% 40% 60% 80% 100% 120% 4th Qtr 1998

3rd Qtr 1998 Reported Control Area and

Bulk Power Utilities Readiness Status, November

1998 Within the overall 44% completion of

remediation and testing reported in November 1998, the control
areas and bulk power systems reported completing remediation and
testing for average of

 42% for nonnuclear generation facilities,

 48% for energy management and telecommunications systems, and

 53% for substation controls and system protective equipment.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 28 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

21

GAO Year 2000 Readiness of Electric Power Industry Control Areas
and Bulk Power Utilities (cont'd)

The reasons utilities gave to NERC for missing the target date
included

11% 43%

30% 16%

0% 10%

20% 30%

40% 50%

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Control Areas and Bulk

Power Utilities' Projected Readiness by 1999 Quarter  renovations
would be performed at

the next scheduled outage (plant shutdown for maintenance and
repairs)

 remediation can not be completed until vendor supplied equipment
or systems are received

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 29 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

22

GAO Year 2000 Readiness of Electric Power Industry Nuclear Power
Plants

NEI reported similar reasons as to why 20 of the 66 nuclear power
plants would not achieve readiness until after the industry target
date:

 renovations would be performed at the next scheduled outage,
remediation can not be completed until vendor supplied equipment
or

systems are received, and  the scope of work involved.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 30 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

23

GAO Year 2000 Readiness of Electric Power Industry Power
Distributors

In 4th quarter of 1998, distributors reported to APPA and NRECA
that the industry target date for readiness will be missed by

 23 percent of the municipal distributors and  10 percent of the
cooperative distributors.

The readiness of a large percent of the distributors is uncertain
because about 73 percent of the municipal and about 23 percent of
the cooperative distributors did not report their status.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 31 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

24

GAO Planned Industry and Regulatory Actions NERC plans to more
closely monitor the status of those facilities that may be at risk
of failure and increase its supervision of their Year 2000
activities, including contacting their chief executives.

In addition, NERC Regional Reliability Councils will coordinate
drills to ensure that personnel and systems are ready for
operations during the Year 2000 transition. The first drill,
focused on communications, will be held in April 1999. The second
drill, scheduled for September 1999, will rehearse the Year 2000
rollover.

NEI did not plan to take any specific actions concerning the
nuclear plants that do not expect to meet the June 1999 industry
target date for readiness.

APPA and NRECA did not specify in their reports any actions they
plan to take concerning the power distributors that do not expect
to meet the June 1999 industry target date for readiness.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 32 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

25

GAO Federal Electric Power Facilities - Power Generation Federal
organizations operate power generation and transmission across
most of the United States. The Army Corps of Engineers and the
Bureau of Reclamation operate hydroelectric plants. The Tennessee
Valley Authority (TVA) operates hydroelectric, fossil fuel,
combustion turbine, and nuclear power plants. The numbers of power
plants operated by these federal organizations are:

Percent of Organization U. S. power Facilities

Corps of Engineers 2. 8% 75 hydroelectric plants Bureau of
Reclamation 1. 5% 59 hydroelectric plants TVA 4. 4% 30
hydroelectric plants

11 fossil fuel plants 4 combustion turbine plants 3 nuclear plants

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 33 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

26

GAO Federal Electric Power Facilities - Transmission The
Department of Energy's Power Marketing Administrations (PMAs)
market and transmit the power produced by the Corps of Engineers
and the Bureau of Reclamation. TVA also markets and transmits the
power it produces. The transmission function involves the
operation of control area and the maintenance of transmission
lines. The facilities operated by these organizations include:

Organization Facilities

Bonneville PMA 15,000 miles of transmission lines, 363 substations
Southeastern PMA Leases transmission lines Southwestern PMA 1,380
miles of transmission lines, 24 substations Western PMA 16, 800
miles of transmission lines, 258 substations TVA 17, 000 miles of
transmission lines, 535 substations

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 34 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

27

GAO Year 2000 Readiness of Federal Electric Power Facilities

The federal organizations engaged in power production and
transmission participated in the November 1998 NERC survey. While
the industry average was reported to be 44% for remediation and
testing, the federal organizations generally reported a higher
level of completion, as follows:

Percent complete Organization November 1998

 Corps of Engineers 66%  Bureau of Reclamation 50% TVA 68%
Bonneville PMA 37%  Southeastern PMA 80%  Southwestern PMA 10%
Western PMA 60%

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 35 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

28

GAO Year 2000 Readiness of Federal Electric Power Facilities
(cont'd)

Most of the Federal organizations did not expect to achieve
readiness by the June 30, 1999, industry target date, according to
their November 1998 responses to the NERC survey.

Organization Projected Readiness

Corps of Engineers 3 rd quarter 1999 Bureau of Reclamation 4 th
quarter 1999 TVA 4 th quarter 1999 Bonneville PMA 2 nd quarter
1999 Southeastern PMA 3 rd quarter 1999 Southwestern PMA 4 th
quarter 1999 Western PMA 2 nd quarter 1999

In January 1999, Southeastern and Southwestern PMAs told us they
had accelerated their schedules and expect to achieve readiness in
the 2 nd quarter of 1999. Thus, the four DOE PMAs plan to meet the
July 1, 1999, readiness milestone. TVA also revised its schedule
for power plants and expects to achieve readiness in the 2 nd
quarter 1999 for all but one of its fossil fuel plants.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 36 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

29

GAO Reasons Federal Facilities Readiness Will Miss Industry Target
Date

The reasons given to us by the Federal organizations for not
meeting the industry target date for readiness varied:

Corps of Engineers The Corps reported that power plants in four of
its districts would not achieve readiness until the last half of
1999. The Corps' Year 2000 program officials explained that the
remediation and testing at these facilities would be complete by
the June 1999 industry target date, but test documentation and
contingency plans are not expected to be completed until the last
half of the year.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 37 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

30

GAO Reasons Federal Facilities Readiness Will Miss Industry Target
Date (cont'd)

Bureau of Reclamation The Bureau of Reclamation projects that 7 of
its 59 power generation facilities will not be Year 2000 ready
until the last half 1999. Reclamation officials explained that the
SCADA systems are being replaced in these facilities and the work
is not scheduled to completed until the last half of 1999. They
further explained that these SCADA systems are part of a large
modernization effort that encompasses remote and local control
systems for many types of major equipment at the dams, including
gates, outlet valves, and monitoring systems for flood control and
water quality.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 38 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

31

GAO Reasons Federal Facilities Readiness Will Miss Industry Target
Date (cont'd)

TVA TVA officials explained that five fossil plants will not meet
the industry target date for readiness because they will not make
the Year 2000 renovations at these plants until the next scheduled
outages for maintenance and repair in November and December 1999.
Because these fossil fuel facilities represent about 26 percent of
TVA's electricity capacity, Year 2000 failures could have had a
significant impact. In response to our concern with the risks
associated with this schedule, TVA officials examined the
incremental costs of rescheduling the outages for these plants and
decided to move the scheduled outage to June 1999 for three
plants, including two with the highest generation capacity.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 39 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

32

GAO Suggested Actions Department of Energy In order to reduce the
risk that a number of entities generating, transmitting, or
distributing electric power will not meet the June 1999 Year 2000
readiness milestone, and to ensure that utility customers have
adequate information about the risk of power outages in their
service area, we suggest that the Department of Energy take the
following actions:

 Work with the Electric Power Working Group to ensure that
remediation activities are accelerated for the utilities that
expect to miss the June 1999 deadline for achieving Year 2000
readiness, including revising outage schedules to perform
renovations prior to the industry target date, where feasible, and
adding resources if necessary to accelerate progress.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 40 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

33

GAO Suggested Actions (Cont'd) Encourage state regulatory utility
commissions to require a full public

disclosure of Year 2000 readiness status of entities transmitting
and distributing electric power-- including 136 control areas and
the 3, 000 entities operating North America's distribution
systems. Such disclosure should include the current readiness
status, the projected date that readiness will be achieved, the
descriptions of the probable and worst case scenarios, and a
public version of contingency plans.

In response to our suggestions, an Energy official said that the
department agrees with the suggested actions in general. However,
he noted that the department will probably not pursue the
acceleration of schedules for those organizations whose systems
are substantially ready except for a small amount of work.
Concerning the public disclosure of readiness status, he said that
Energy plans to coordinate the issue of public disclosure with
state regulatory agencies.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 41 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

34

GAO Suggested Actions (Cont'd) Nuclear Regulatory Commission To
help ensure that all licensed nuclear power plants will identify
and rectify any Year 2000 problems with their computer systems
well before January 1, 2000, and that the public and the electric
power industry is given adequate information about the Year 2000
readiness status of individual nuclear power plants, we suggest
that NRC take the following actions:

 In cooperation with the NEI, work with the nuclear power plant
licensees to accelerate the Year 2000 remediation efforts among
the nuclear power plants that expect to miss the June 1999
deadline for achieving Year 2000 readiness, including revising
outage schedules to perform renovations prior to the industry
target date.

Appendix I Briefing on Electric Power Industry Year 2000 Readiness

Page 42 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

35

GAO Suggested Actions (Cont'd)  Publicly disclose the Year 2000
readiness status of each of the

nation's operational nuclear reactors. The disclosure should
include the date when each nuclear power plant is expected to be
Year 2000 ready.

NRC officials stated that nuclear power licensees are required to
report their Year 2000 readiness status on July 1, 1999. NRC plans
to focus its efforts on nuclear power plants that may miss the
July 1, 1999, milestone. NRC has completed audits of 12 nuclear
power plants and is currently in the process of determining
whether or not to conduct 32 additional audits. NRC official told
us that NRC will release the information on the Year 2000
readiness of individual nuclear power plants in July 1999.

Let t er

Page 43 GAO/AIMD-99-114 Year 2000 Readiness of the Electric Power
Industry

Appendix II Major Contributors to This Report Appendi x I I

Accounting and Information Management Division, Washington, D. C.

Keith A. Rhodes, Technical Director William N. Isrin, Operations
Research Analyst Anh Q. Le, Senior ADP/ Telecommunications Analyst
Daniel K. Wexler, Senior Information Systems Analyst Michael A.
Tovares, Senior Information Systems Analyst

(511468) Let t er

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