Testimony of Gary W. Gardner
on behalf of
The American Gas Association
Before the
Special Committee on the Year 2000 Technology Problem
U.S. Senate
on
Year 2000 Readiness of the Utility Industry
<a href="http://www.aga.com/gio/testimony061298.html">Testimony</a>
June 12, 1998
Opening Remarks
Mr. Chairman and members of the select committee, Good Morning. I am Gary Gardner, Chief
Information Officer of the American Gas Association. Thank you for inviting me to speak to you regarding
the status and readiness of natural gas distribution companies as it relates to Year 2000 (Y2K) issues.
Our industry views the Y2K technology issue as a serious one and has been working hard to ensure
safety and reliability in the natural gas distribution chain.
The American Gas Association (A.G.A.) represents 181 local gas utilities that deliver gas to 54 million
homes and businesses in all 50 states. Our members distribute 85-90% of the natural gas delivered in the
United States. Additionally, A.G.A. provides services to member natural gas pipelines, marketers,
gatherers, international gas companies and a variety of industry associates.
Background
A.G.A. and gas utilities have been fully aware of the issues surrounding the Year 2000 and the possible
impact on U.S. citizens (our customers) and the economy. Natural gas utilities have always been
committed to ensuring the safe and reliable operation of our delivery systems. As a result, our industry has
been heavily working on Y2K issues for the past three years. As with many industries, the issue was first
viewed as an information technology (IT) problem and most of the activities were focused in the internal
IT departments of our companies. Over the last two years, the major emphasis has shifted to the issues
surrounding embedded systems and contingency planning.
With respect to risk management and contingency planning, our industry is very proud of its record of
maintaining reliable service to our customers in the face of natural disasters, extraordinary weather
conditions and emergency situations. Our contingency planning efforts are based on years of experience in
operating safe delivery systems for consumers.
Industry Survey
In an effort to provide specific information regarding the preparedness of the U.S. natural gas utilities,
A.G.A. has gathered data for this hearing from active players in Y2K issues within our industry. First, the
Gas Research Institute, the research, development, and commercialization organization of the natural gas
industry, conducted a survey in May, predominately of local natural gas distribution companies. The
companies which responded to the survey have customer bases that range from 35,000 to 4.8 million.
The objective was to assess the Y2K status and need for collaborative efforts supporting Year 2000
resolution.
Preliminary results, based on responses of 49 companies of mixed size and geographic location are
summarized as follows:
The confidence level of avoiding significant operating disruptions is high - 90% responded that they
were very confident in their ability to resolve software problems by the end of 1999.
The companies are undertaking a structured approach to resolving Y2K issues - all respondents
indicated a formal, enterprise-wide assessment has been conducted. The priority areas and issues
include operations, finance, IS vendor reliability, supply chain reliability, building systems, and
customer service. Nearly half of the companies that responded indicated that Y2K amendments
were made to their already existing contingency/emergency plans.
The vast majority of the companies have been working on the software issue for 2 - 6 years. At
this point, 20% of the companies indicated they have completed their software remediation
program.
Overall, 93% of the companies in the survey indicated that they are beyond the initial inventory and
assessment phase, and in the remediation/testing/completed phases of software code resolution.
In terms of embedded systems, 71% were very confident in their ability to resolve the embedded
processor issues. This confidence level is expected to increase as they complete the remaining
phases of their Year 2000 plan.
84% of the companies are in the remediation/testing/completed phase of their embedded processor
program - with 80% of the companies expecting that their embedded systems will be Y2K
compliant by June 1999.
I'd like to comment on the use of the term "Y2K compliant". "Y2K ready" may be the preferred term
when referring to a company's readiness. For purposes of the survey, Y2K compliant means the
component is unaffected by the Y2K dates. Non-compliance, however, is not interchangeable with the
term "dysfunctional system." In the "triage" or prioritization process, components that are not
mission-critical may be intentionally bypassed prior to Dec. 1999. They may be tested and the
dysfunction found not to have significant implications to operations, or not tested at all, depending on their
rank in the prioritization.
For distribution companies, the focus for embedded systems is to ensure that on January 1 mission-critical
gas delivery systems are working properly. Also, it must be noted that most local distribution companies
have manual controls as backups, so getting around a embedded component should not be difficult. Our
bottom line emphasis and focus is on the remediation of issues that directly affect the delivery and proper
accounting of natural gas.
Remediation Experiences
The results of remediation testing by the management consulting firm of Stone and Webster should also
provide the committee with a sense of the general preparedness and the nature of the challenges facing the
industry. Stone and Webster has conducted fourteen Y2K assessments for gas, electric and combination
companies. These companies have customer bases that range from 500,000 to 1.5 million. Their efforts
have focused on all aspects of utility Y2K vulnerabilities including:
Embedded systems within core utility operations
Upstream critical service providers (electric, water, telecommunications)
Downstream use of gas at customer location
Vendor supply chains
With respect to the issue of embedded systems, the embedded systems are defined as systems within a
gas utility's operation that contain microprocessors and have time/date stamps associated with their
normal function. From the point of entry to the distribution/transmission pipeline of the local distribution
company to the meter, you may find 50-100 systems with embedded processing, such as:
Locations
Embedded Systems
Storage Fields
Compressor Control, Flow calculations
Gas Control
SCADA (supervisory-controls-data acquisition) systems
Flow and control computers
Metering
Transmit and Correcting Devices, Mobile and Handheld devices
Gas Management
Electronic Bulletin Boards
Operations
Instrument calibration systems, regulatory compliance tracking
Facilities
Energy management control systems, HVAC, Security
The process to assess and identify embedded systems typically follows an auditable methodology such as
system identification, determining compliance from manufacturers, and performing remediation
(replacement, upgrades, contingency plans) and associated testing. This process, based on complexity of
operation, could take 12-18 months to complete.
Some general findings from the Stone & Webster engagements of natural gas utilities include the following:
Embedded systems within a gas utility, whether a large or small LDC, are essentially similar.
Most utilities are consistent in the type of devices they utilize (i.e. meters) and many have manual
override.
The number of critical operational systems -- those that directly affect the delivery of gas -- are
typically less than 10. The systems that predominately have Y2K compliance issues are the gas
operation supervisory/control, (SCADA) systems.
The critical embedded systems that have Y2K compliance problems are typically fixable through
repair, upgrade, or replacement and can be corrected in less than a year.
Summary
In summary, the local distribution companies, our nation's natural gas utilities, are actively and aggressively
addressing Y2K issues. Segments within the natural gas industry (production, transmission, and
distribution) are collaborating and working closely together in the assessment and remediation of Y2K
issues. Operational and core business systems are being identified and remediated. While our members
are at varying levels of compliance, a very high level of confidence is present regarding the safe and
reliable delivery of natural gas. Because our industry is based on the successful delivery of services, and
has established, proven contingency plans in place to handle crisis and emergency situations, we are
prepared to handle the issues related to the Year 2000. As we are today, our industry is committed to
ensuring the safe and reliable delivery of energy to U.S. citizens, our customers.
Thank you for the opportunity to testify this morning. I look forward to responding to any questions you
may have.
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