[UTILITIES] Testimony of the Chief Information Officer (CIO)
for the Federal Energy Regulatory Commission (Commission or FERC)
'Testimony of
Kathleen Hirning, Chief Information Officer
Federal Energy Regulatory Commission
before the
Subcommittee on Technology
Committee on Science
United States House of Representatives
May 14, 1998
Madame Chairman and Members of the Subcommittee:
I appreciate the opportunity to appear before you to discuss the Year 2000 effect on energy
utilities. I want to commend you, Madame Chairman, and the Science Committee for holding a
hearing on this critical issue. My name is Katie Hirning, and I am Chief Information Officer (CIO)
for the Federal Energy Regulatory Commission (Commission or FERC). My responsibilities for
information technology include operating and maintaining FERC's internal network and its
automated systems, and developing infrastructure needed for electronic filing, workload
processing, and information dissemination. I also represent the Commission on the President's
Council on Year 2000 Conversion and as a member of the Small Agency Council.
The magnitude of the potential Year 2000 problem in the regulated energy industries is not yet
known. However, FERC acknowledges the importance of the Year 2000 problem and recognizes
that its involvement in solutions to it may be necessary. Because the energy sector is critical to
the operations of all other sectors of the economy, I believe that it is essential for the federal
government, along with industry, to promote awareness of this problem through cooperation
and communication.
Today, I would like to: (1) describe the Year 2000 problem for energy businesses in general; (2)
describe to our best knowledge what the industry is doing; and (3) inform you of what the
Commission is doing, in coordination with the President's Council on Year 2000 Conversion, to
encourage industry to take steps to ensure that our Nation's energy infrastructure continues to
function at its full capacity on January 1, 2000 and beyond.
However, permit me first to lend a critical perspective to my testimony. The Commission
regulates economic aspects of natural gas pipeline companies, electric utilities, and oil pipeline
companies to ensure that their customers' rates and terms and conditions of interstate
transmission service are just and reasonable. In addition, it licenses privately-owned and
operated hydroelectric facilities on navigable waterways of the United States.
The Year 2000 issue presents an unusual problem for FERC because the Commission does not
exercise direct authority over internal operations of the regulated companies' businesses as a
general matter. The Commission would have regulatory authority over the ability of regulated
utilities to recover, in their rates, the costs expended in correcting the Year 2000 problem, but
not over the measures taken by the utilities to correct the problem. Furthermore, FERC's
regulation does not encompass the entire energy sector or even all aspects of the natural gas,
electric, or oil pipeline industries. Large portions of these industries are subject to the authority
of other Federal agencies or state and local governments, or are self-regulated or unregulated.
Year 2000 Compliance Within the Commission
The Commission is diligently addressing our own computer systems to make sure that they work
on and after January 1, 2000. A Year 2000 task force was established in March 1997, to examine
FERC's computer systems and identity systems and applications with the potential for
non-compliance, and to suggest a strategy for formulating corrective action for each. Of the 12
automated systems that are considered to be mission-critical, one has already been made
compliant, one will be upgraded, three have already been retired, four more will be retired, and
three will be replaced. The agency has developed renovation codes as a contingency measure
that will enable it to operate even if replacement systems are delayed in implementation.
Automated equipment associated with the agency's physical plant, such as elevators and the
security system, were also evaluated. All equipment is compliant except for the security system,
which will be upgraded before March 1999.
Year 2000 Problems for Energy Businesses
Some believe that correction of Year 2000 errors and testing of those corrections, if left
incomplete, could have serious consequences. On the other hand, the consequences may be
minor and quickly repaired or accommodated by contingency planning. The consequences of
not fully understanding the seriousness of the problem in particular sectors is the problem. We
believe that information and cooperation are the keys to addressing the Year 2000 conversion
problem. Cooperative communication is necessary in order to quantify the nature of the
problem, ascertain the completion of development and testing of solutions, and promote
operational contingency plans in a timely manner to avoid any loss in power. There is a need to
quantify what effect a failed computer, computer software program, or embedded
microprocessor would have on the production and delivery of electricity, gas, and oil. Thus far,
available information is anecdotal, with very little empirical data on completion of conversion
tasks and structured testing.
Conventional computer systems and embedded systems (a.k.a microprocessors, chips, and
'black boxes') are of major concern for the energy sector's Year 2000 readiness. The impact of
conventional computer systems on the energy sector is not unlike its impact on other sectors.
Within the energy sector Year 2000 readiness includes conventional computer systems.
Noncompliant software in a computer can affect a company's back office operations, such as
financial control, human resources (payroll, benefits, etc.), purchasing, inventory, plant
maintenance, and other administrative operations, and can impact direct operations and
exchanges of information among energy companies. Energy companies use computers to
connect plants, refineries, district offices, and major administrative and operational systems that
interface with large data centers. Computers are also used to remotely control transmission
system breakers, coordinate power generation schedules, compensate for large transmission
line breaks, and provide protection against voltage, current, and frequency fluctuations.
Year 2000 readiness also includes the performance of thousands of embedded
microprocessors. Embedded systems are present at plants, pipelines, control and dispatch
centers, headquarters, and other energy facilities. Identifying Year 2000 errors in embedded
systems generally requires significant manual effort. The process cannot be automated and is
likely to require physical inspection of hardware distributed widely throughout an organization.
Inventory, assessment, and remediation of embedded systems are especially difficult and
expensive.
Reliability in the Electric Industry
In the electric industry are entities that generate, transport, or distribute power, or do all three.
Also there are systems that transport fuel to power plants. Transmission and distribution
systems move power from the power plants to consumers.
Security of supply is a major issue for the electric power business, especially during this period
of transition to open and competitive markets. Although reliability is very important to natural
gas and oil pipeline operations, the electric transmission systems are highly integrated
machines that ties utilities and their customers together. The U.S. electric power system
includes thousands of power generating plants and millions of consumers -- all tied together by
the electric power grids. One electric power plant alone may have thousands of embedded
systems. Without testing, the potential impact of Year 2000 errors could cause some embedded
systems to malfunction, possibly resulting in a ripple effect across a portion of the grid. Because
of the interconnected nature of the grid, it is important to test for malfunctions in
interconnected systems as much as feasible.
Embedded systems are used to control and monitor power production and delivery equipment in
electric utilities. Computer controlled equipment includes many date-sensitive components,
from very small programmable logic controllers to extensive network control systems. Many of
the systems that have a date function may pass through the critical date without causing a fault.
But they could later refuse to accept a modified instruction or even a new date entry. Other
systems may have faults that could result in power outages.
Grid control is decentralized. Each utility or sometimes a small group of utilities controls its own
grid. However, utilities are interconnected, and must coordinate their activities to maintain
reliability. Rules for such coordination are set by ten regional reliability councils, which
collectively form the North American Electric Reliability Council (NERC). At the May 4-5, 1998
meeting of the NERC Board of Trustees, the NERC decided -- at the request of the Department
of Energy (DOE) -- to undertake a survey of its members to assess the likelihood of a Year 2000
problem, to determine the amount of testing that has been done by member utilities, and to
report to DOE on its findings.
Reliability in the Oil and Gas Industries
There is a similar situation in the oil and gas industries, i.e., interdependencies between the
production facilities and pipelines used for transporting and distributing oil and gas. The
pipeline industry is made up of producer, transmission, and distributor sectors. Embedded
systems occur in all sectors. Some oil and gas production facilities, such as offshore platforms
may have ten thousand or more embedded chips. Many may be subsurface and physically
difficult to access.
Both the gas and oil industries use Supervisory Control and Data Acquisition Systems (SCADA)
to acquire information from remote sections of pipeline, and to control the flow of fuel at remote
locations by using computers linked to satellite and telephone communication systems. SCADA
systems allow pipeline operators to obtain timely information, and allow producers to have
access to information for purchasing distribution services based on the current volume of gas
in a pipeline. Information provided by SCADA systems is accessed by users to purchase
transportation service, check on billings, or arrange storage of gas that has been transported
through a pipeline. Year 2000 compliance will be critical for SCADA systems.
Gas pipelines include compressor stations to move the gas through the lines, as well as gate
stations where pressure is reduced, volumes of gas are measured, and regulators control the
flow of gas into distribution lines. The gas industry is addressing the Year 2000 issues
associated with interconnections among producing and distribution functions, i.e. "upstream
and downstream" functions. Another Year 2000 focus is on newer equipment purchased to
communicate station-to-station and to meter the flow of gas. As stations are generally 50 to 75
miles apart, if communications fail due to Year 2000 problems, alternative means must be used.
Many of the Year 2000 considerations for the gas industry are present in the oil industry, only in
different form. For example, meters to measure oil use transducers to measure liquids. Oil
SCADA systems require a shorter response time for an oil leak compared to gas leaks, which
may be remediated by changing pressure. Unlike the electric industry, the oil and gas industries
are fragmented, and do not have regional councils or control areas.
The Industry Response
The extent of completed Year 2000 work within the energy industry is largely unknown.
Compilation of this information has been inadequate. Larger utilities and some industry
associations have promoted awareness of the Year 2000 issues and, in some cases, have begun
to test and share potential solutions. The state of awareness and planning of smaller utilities
and cooperatives is less certain. While a growing number of manufacturing companies are
reporting the Year 2000 readiness status of their products on the Internet -- with varying
degrees of specificity -- the number of product types is very large and the conditions for their
use vary considerably. Because of the costs involved in developing and testing Year 2000
solutions, and certain legal considerations, some Year 2000 information is being made available
to association members only.
One of the largest Year 2000 programs, offered for a fee by the Electric Power Research
Institute (EPRI) to member companies of electric, oil, and gas associations, includes:
˜ an electronic system for real-time data and information collected from a number of
industries, government agencies, vendors, and other service providers; and
˜ workshops for interactive discussion of methods and results among those involved
in Year 2000 embedded systems efforts and the sharing of information among
participants.
The Edison Electric Institute is working closely with the EPRI program, on behalf of
investor-owned electric utilities. The National Association of Regulatory Utility Commissioners'
educational program has a session scheduled in July to discuss Year 2000 issues. Year 2000
managers within the national oil, gas, and electric associations are in frequent contact, and are
working together to address these issues. Several Year 2000 programs were initiated in the past
year by industry associations. Some state commissions and local utilities are also working
directly with national associations.
Last year the American Petroleum Institute (API) formed a Year 2000 taskforce of
representatives from industry. They agreed to construct databases from various segments of
the industry. API has scheduled a meeting in July to discuss Year 2000 compliance, information
exchanges, and other concerns. API also sponsored and disseminated a Year 2000 awareness
research paper. The Interstate Natural Gas Association of America has conducted a survey of
their member companies Year 2000 compliance status, and the results are currently being
analyzed. The Gas Research Institute is surveying their member companies to help formulate
Year 2000 strategies.
The Federal Energy Regulatory Commission's Role
The Commission is, at the Chairman's direction, exploring how to mount an effective Year 2000
outreach program. It would be designed to encourage its regulated companies to take
responsible action to ensure that their energy systems will continue to function on January 1,
2000 and beyond. Without cooperative communication between industry members and the
federal government, understanding the potential magnitude and complete implications of the
problem is difficult. We believe that information and cooperation are the keys to addressing the
Year 2000 conversion problem. Cooperative communication is necessary in order to: (1) quantify
the nature of the problem; (2) ascertain the development and testing of timely solutions; and (3)
promote operational contingency plans in case of potential loss of power.
Increasing Awareness of Year 2000 Problem
We are working cooperatively with other federal agencies as a member of the President's
Council on Year 2000 Conversion. Through our participation in the Council's Energy Working
Group, we are coordinating with other Federal agencies involved in the energy sector to
develop effective programs for facilitating Year 2000 solutions throughout the energy industry.
We are also developing an outreach program for the Commission's regulated entities and
industry associations to promote awareness of the potential seriousness of the Year 2000
problem and the need to devote adequate resources to fix it.
At every opportunity, FERC's Chairman, Commissioners, and Office Directors are promoting
awareness of the Year 2000 issue and encouraging the cooperation that already exists among
energy organizations and their customers. Further, we hope to encourage companies to make
more information available to the general public. The public needs specific information on how
serious the problem is, what is being done to address it, and what they can expect come January
1, 2000. The Commission will also help make information available to our regulated companies
and to the general public on Year 2000 through the FERC Web site regarding how serious the
problem is, what is being done to address the problem, and information developed by others to
solve technical issues.
Currently, we have begun to establish regular channels of communication with appropriate Year
2000 experts in industry and maintain an awareness of upcoming events and planned initiatives.
We are taking steps to:
˜ promote awareness among companies under our jurisdiction;
We will minimize redundancies by incorporating Y2K assessments already made of
public companies by financial authorities (SEC, NASD, ???).˜ monitor progress within
the industry;
˜ develop a link on the FERC web site to Year 2000 information;
˜ encourage the inclusion of Year 2000 subject matter in future industry seminars,
trade events, television programs(American Gas sponsors a Business TV Series this
year which includes pay-per-view shows), and publications; and
˜ seek Year 2000 public speaking opportunities; and(Our CIO is scheduled to speak
to the Washington DC Y2K Users' Group in June.)
˜ work with members of the Energy Working Group of the President's Year 2000
Conversion Council.
In the near future, the Chairman is considering taking the following steps:
˜ sponsoring a Year 2000 staff technical symposium for FERC's regulated companies
and industry associations;
˜ offering to present Year 2000 information at industry workshops and seminars
addressing the problem; and
˜ preparing Year 2000 promotional materials for dissemination at conferences and
meetings.
If, over the next few months, we find that some segments of the industry appear to be unable to
meet the requirements of Year 2000 deadline, we may have to take more direct measures to
ensure an uninterrupted power supply. Those measures will vary by the amount of regulatory
authority we have and the degree of cooperation we receive from industry.
Conclusion
In the end, energy industry participants have the responsibility for addressing this problem. We
believe the Commission has a central role nevertheless. The Chairman views it as the
Commission's responsibility to the American public to help alleviate this potential threat to the
reliability of our energy systems. We can promote the sharing of a Year 2000 information within
the industry, its companies, suppliers, consultants, and state and local expertise. We can help
disseminate what is known in other industries about similar products and problems, and we can
maintain an awareness about factors external to the industry upon which energy depends.
We look forward to working with the Subcommittee on Technology in the
months ahead and we welcome your questions.
BIO FOR KATIE HIRNING
Katie Hirning is currently the Chief Information Officer (CIO) for the Federal Energy Regulatory
Commission (Commission). As CIO, Ms. Hirning serves as the Director for the Office of the Chief
Information Officer (OCIO). The OCIO is responsible for operating and maintaining the
Commission's internal network, its automated systems, and developing infrastructure needed to
accommodate electronic filing and provide immediate electronic access to Commission data by
internal staff and external parties. As CIO, Ms. Hirning represents the Commission on the
President's Council on Year 2000 Conversion and is a member of the Small Agency Council.
Ms. Hirning has held a variety of positions in over eighteen years of experience with the IT
industry, working with software and computer companies. She has traveled extensively
throughout the world, creating business partner opportunities for the distribution of software
solutions. Before joining FERC, from 1996 to 1997, she was an independent consultant
representing electronic data interchange (EDI) translation and communication software, for
EXTOL Corporation, a large EDI provider. Prior to that, Ms. Hirning served as Vice President of
NewGeneration Software, Inc., from 1989 to 1994. Ms. Hirning was the Democratic nominee for
Congress in California's 4th District in 1994 and 1996.
Ms. Hirning, who is a native of California, is a graduate of the California State University and
received an MBA from Golden Gate University, San Francisco, California.
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