Ontario Hydro's Program for Addressing the Year 2000 ("Y2K") Issue

Thank you for your recent request for information on our Y2K program.

One of the major benefits of being interconnected to other utilities through "the grid" is the resiliency and redundancy this vast pool of resources provides. Since electricity cannot be stored, every time someone "turns the lights on" additional generation must be made available immediately. "The grid" ensures that abrupt changes in demand are spread over a large number of generators, so the risks of any one utility not being able to cope with abrupt changes is minimised. The benefits of being connected to "the grid" far outweigh any potential vulnerabilities. We are working with the other "grid" utilities to make sure any vulnerabilities are minimised, by testing the interfaces between the utilities, by ensuring our system protection equipment and procedures are ready to address the Year 2000 threat, and, as we approach the December 31st, 1999 rollover, by adopting the special precautionary operating posture agreed to with other "grid" utilities. Failing all of this, because most of the power consumed in Ontario is produced here, we could also completely isolate our electricity system from those of the interconnected utilities, but such a course is not currently judged to be in our best interests.

Ontario Hydro and its successor companies: OntarioPower Generation, Ontario Hydro Services Corporation and the Independent Electricity Market Operator, have been working diligently on this issue and are satisfied with our progress.

Ontario Hydro began its Y2K program in 1996 by setting up a Year 2000 Corporate Program Management Office (CPMO). The CPMO was accountable for designing, monitoring and coordinating the execution of an integrated corporate Y2K program. The head of the CPMO is a Vice President reporting directly to our CEO. The CPMO has contracted the services of major consulting firms to advise on procedure and methodology, to supplement our own internal staff resources, and to provide an independent review of the quality and thoroughness of our work. By restricting the role of the CPMO to oversight functions we avoided any interruption of our Y2K progress due to the restructuring of the energy market under the Energy Competition Act (Bill 35), which became law in October 1998.

At its peak strength in the fall of 1998, our Y2K program was staffed by over 600 full-time personnel, and had budgets (including contingencies) in excess of one hundred million dollars. At the end of February 1999, there were still 401 full-time staff working on the program. Each business unit set up its own Program Management Office (PMO), headed up by a Year 2000 Project Manager. Their first action was to complete a comprehensive inventory and assessment of all of their "digital assets", a term we use to describe any date-sensitive computerized component. The term encompasses hardware platforms, telecommunications networks, business systems and other forms of software, embedded-chip and process-control devices, facility management and environmental systems. The inventory provided a list of components that might be at risk from Y2K. The impact assessment provided such details as the business criticality of a particular asset, the date on which it might conceivably fail, how severely the failure would impair our ability to carry on business, how the failure might affect interfacing components, and so on. This data was then used to create an integrated master schedule for hundreds of separate projects to repair, retire or replace items with serious Y2K problems.

As Ontario Hydro had been moving away from custom-developed software towards commercial Enterprise Resource Planning (ERP) packages, we already had several major replacement projects underway when the formal Y2K program was initiated. These major replacement projects were all completed in 1998, with the new systems being subjected to strenuous Y2K-readiness testing as part of the system commissioning process. The success of these replacement projects allows us to decommission our legacy mainframe computers and business systems, a major source of Y2K risks, early in 1999.

As of March 1, 1999 all critical systems, identified in the original inventory, have been certified "Year 2000 ready"; detailed Business Contingency Plans have been completed and reviewed by our Quality Assurance staff; and an independent review of the entire program has been conducted, with findings presented to the Ontario Hydro Board. We have conducted large-scale integration tests of four generating stations without experiencing any problems that would affect plant output, and we have begun a long-term test, under live load conditions, of our transmission and distribution system. We are an active participant in the North American Electric Reliability Council (NERC), and are working closely with NERC and other utilities in planning interoperability drills and exercises in 1999. Finally, we plan to be operating our system in a very conservative, low-risk posture during the actual century changeover. By doing all of these things, we plan to minimize and hopefully eliminate any negative effects of Y2K on our customers and stakeholders.

The business contingency plans, which were developed, define essential business processes and identify those external parties who are critical to those processes operating in a normal manner. These external resources include suppliers, distributors, large customers and providers of infrastructural services. During 1999, we will monitor the Y2K-readiness of these parties, and will invoke our contingency plans should that become necessary. We have entered into a closer working relationship with other participants in emergency preparedness, including the Department of National Defense, Emergency Measures Ontario, and the OPP, and we are working together to refine and strengthen our collective emergency response capability. Although we do not foresee emergency situations arising due to Y2K, situations sometimes occur despite one's best efforts and it is prudent to prepare for the worst case while planning for the probable scenario.

Many individuals, businesses and communities are concerned about the vulnerability of their power supply to Y2K disruptions. To provide more factual data to help allay fears fueled by misinformation and unreasonable hypotheses, we established a multifaceted communications program late last year. This program involves the use of bill inserts, status report booklets, pro-active mailings, more external presentations, an interactive voice response hotline (416-592-2000), and a Y2K page on the Ontario Hydro web-site at www.hydro.on.ca.

I hope that this information helps to reassure you that Ontario Hydro and its successor companies are doing everything within our ability to manage the Y2K issue. Our CEO has called Y2K "the number one priority of Ontario Hydro", and that commitment has been echoed by the senior executives of the successor companies. For almost a century, Ontario Hydro has provided the people of Ontario with a level of service reliability unsurpassed in the world. Our Y2K program is a major effort aimed at ensuring that we do everything within our control to make January 1, 2000 just one more day of dependable electricity.

_______________ *those systems with a direct bearing on the production and distribution of electricity in a safe and environmentally responsible manner

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dafny

-- dafny (hello@dafny.com), March 15, 1999

Answers

Throw the companies Q-10 statement to the SEC on here giving a few more details concerning thier testing and you have a reassuring post.

very nice dafny

Thanks.

nyc

-- nyc (nycnyc@hotmail.com), March 15, 1999.

Once again - if you start early enough (1996!) , and if you spend enough money in the right places (100 million! - in this single group) and you get the right corporate-level attention (1600 people!), then the Y2K problem can be solved. Notice that testing was completed very early - mid February, 1999. And they still will continue "testing" through the remainder of the year, and are keeping 400 people active in Y2K issues - after testing is 'completed".

Compare this company's schedule to Florida Power and Light. Down there, they are scheduled to finish testing in late October. Not October 1998. Not February, 1999. October, 1999.

Of course, that test date might become February 2000 if anything goes wrong in remediation.

For this company. In this region only.

Any other power company not showing this level of effort over this timeframe after spending this much money can be assumed to be on the road to failure.

-- Robert A. Cook, P.E. (Kennesaw, GA) (cook.r@csaatl.com), March 15, 1999.

nyc: a Canadian company would not have to file SEC 10Q's.

-- Night (y2k_nightmare@my-dejanews.com), March 15, 1999.

Ouch!!!! Dammit Night!!!!!

LOL. Is there an equivalent statement for canadian Authorities?

nyc

-- nyc (nycnyc@hotmail.com), March 15, 1999.