I have recently been told by a pastor of a local church that he spoke with Ken Walker out of Columbus OH, who is the person at AEP to whom all y2k inquiries are to be made. Mr. Walker told him there were actually only three grids in the U.S. (one being AEP) from which all electricity in generated. He said he feels AEP will be in good shape come January 2000 (sound familiar), but his concern was that, as the electricity is distributed to plants, it must be "balanced" between all plants, and if some of the plants are not y2k ready and have to shut down, this balance may be adversely affected and cause a ripple effect which could shut down healthy plants. Another thing my pastor friend was told by is that AEP currently stockpiles 30-45 days of coal at all times and they are planning to increase this stockpile before January, 2000. Does anyone know if this is accurate? Mr. Walker also commented that what most people don't realize is that the coal is not used in the raw state it is received, but must undergo a cleasing process and then be pulverized into a powder-like state before it can be used. I would really appreciate any comments on these statements.

Pat @mgusta1317@aolcom

-- Anonymous, February 04, 1999

Answers

Pat: What your Pastor has told you generally "squares" with my knowledge of AEP, however, I am unable to comment on their current remediation status. You might want to check AEP's latest 10-Q for that information. Generation and load must be in balance at all times. A sudden imbalance can cause generating units to "trip" offline. Generally, units that trip (unless they are nuclear) can be brought back on line within a reasonable amount of time. Stockpiling additional coal is a prudent contingency strategy for Y2K and I believe AEP would consider doing so. Coal is washed for some units at some plants to remove sulfur to help comply with emission requirements. Coal must also be pulverized into a fine powder on its way from the coal pile to the boiler. Maybe someone from AEP can chime in here and further clarify. Hope this helps.

-- Anonymous, February 04, 1999

Pat, there are three "grids" in the continental United States - (1) the Eastern Interconnection, which comprises the eastern two-thirds of the U.S. and also parts of Canada; (2) the Western Interconnection, which comprises the parts of the U.S. west of the Rocky Mountains and the Southwest, as well as connections in Mexico; and (3) the Texas Interconnection, which also extends into Mexico. American Electric Power Co, Inc. (AEP) is part of the Eastern Interconnection.

These three Interconnections should not be confused with the ten NERC Regional Councils, which have management, industry oversight and coordination responsibilities: "The membership of NERC is unique. As a not-for-profit corporation, NERC's owners are ten Regional Councils. The members of these Regional Councils and the one affiliate Council come from all segments of the electric industry - investor-owned, federal, rural electric cooperatives, state/municipal and provincial utilities, independent power producers, and power marketers. These entities account for virtually all the electricity supplied in the United States, Canada, and a portion of Baja California Norte, Mexico."

Maps of the three grids can be found at:

http://www.eia.doe.gov/cneaf/electricity/chg_str/chapter3.html

http://www.yardeni.com/public/y_19971208.pdf (note that you will need the adobe reader for this one)

There is also a map of the NERC Regional Councils at:

http://www.nerc.com/regional/

To my knowledge the statements about the coal processing are accurate, and I have read utility reports which mention that the coal handling machinery was considered part of mission-critical systems. Several utilities have stated they are or will be stockpiling more coal than usual as a contingency plan to mitigate potential railroad supply problems.

The "balancing" between plants is what the grid interconnections exist for to begin with. Utilities which have extra power in the winter sell to those who need extra, and vice versa. Minute to minute, hour to hour, and day to day demands are all balanced throughout the grids. These interconnections are why all utilities, regardless of how confident they are in their own repairs, have concerns about the possibility of power disruptions and outages. As NERC stated in their recent report:

"Each of the interconnections is a highly connected electrical network. A major disturbance within an Interconnection can have an immediate effect throughout the Interconnection. This high level of interdependence within an Interconnection means that the strength of the overall system may only be as strong as the weakest link."

AEP is a utility corporation of which Appalachian Power Co, AEP Generating Co., Columbus Southern Power Co., Indiana Michigan Power Co., Kentucky Power Co., and Ohio Power Co. are all a part.

In AEP's Year 2000 statement in their SEC 10Q they said that as of September 30, 1998, they were finished with the inventory and assessment of IT systems, but not finished with the inventory and assessment of Non-IT systems (embedded systems). They had fixed 60% of their Mainframe systems and had only 2% of the remediation and testing of Non-IT systems done. They had spent 15 million dollars on their Y2K project and estimated they total expense could be 53 million. In other words, they had spent only about 28% of the total they estimated the project would cost. AEP did state they had "accelerated" the mission critical and high priority programs to try to meet the NERC recommendations for completion. (Their initial completion dates were later than NERC wanted them to be.)

They stated the "potential problems related to erroneous processing by, or failure of, these systems, are: Power service interruptions to customers; Interrupted revenue data gathering and collection; Poor customer relations resulting from delayed billing and settlement."

There is also another large project, now ongoing, which demands much of AEP's efforts:

"American Electric Power and Central and South West Corp., two premier providers of energy services, announced in December 1997 they would merge. The merger will form the largest electric utility holding company in the United States, serving 4.6 million customers in the United States and more than 4 million customers in the United Kingdom." After the merger is completed, this holding company will have 76 generating stations in the U.S. and 11 generating stations in the United Kingdom. "Shareholders of both companies approved the merger in May 1998. Several regulatory approvals are required before the merger can be completed." The link to read about this merger is at: http://www.aep.com/merger/index.html

As you can see, Pat, both AEP and Central and Southwest have a whole lot of issues demanding attention, of which Year 2000 preparations are only part. Also, my personal assessment of the details of progress they reported to the SEC is that AEP has a whole lot of Year 2000 work left to do and not much time to do it in. It would seem to me that preparations for possible disruptions would be the prudent thing to do, in the absence of sure knowledge that they will be ready.

-- Anonymous, February 04, 1999

I have read with interest, the replies to your posting on AEP.

In my research the problem of imbedded systems seems to be more of a potential problem than software.

I have read as much technical literature as I can find and it seems that imbedded chips not only create a greater hazard, they are extremely difficult to diagnos. The failure of these systems need not happen at anty particular time because while the are date sensitive they may not fail on a date that can actually be determined. Also, an off the self chip may or my not be compliant even when an identical one is, so each chip must be checked.

Also in a recent article in BUSINESS 2.0 the author clearly shows the inter-related nature of energy supplies to power generation. The plant is compliant (maybe) but because of rail problems, gas transmission problems ect., the plant can not run. If AEP is going to stockpile more coal, can we assume that every coal fire facility will?

Most of our oil is imported from countries way behind in Y2K, and shipped here by carrier way behind on Y2K. The energy industry is awash in imbedded systems from oil field to power plants through to power transmission. I would like to see some one in the power industry CLEARLY express where the industry stands in relation to this problem of inter reiance. I really do not care that AEP or whom ever is compliance what is their position on non-compliant suppliers that may be overseas.How much coal can they stockpile? How reliant are they on overseas oil? If they burn natural gas, are their suppliers fully compliant? Have they gotten assurances that rail, ship, and even telecommunications will be operational.

I keep hearing that these "individual" utilities will be "Y2K ready" with no explanation as to what that really means.

Just somes thought, I would like to hear from someone in the business thanks

-- Anonymous, February 04, 1999

The y2k project director for one of the major chemical companies told me that when they considered what kind of stockpiling of raw materials, etc. they could do during 1999, the response from the railroads was "Forget it -- we don't have the spare capacity." Sounds like a very big problem for whatever contingency movements of food, fuel, etc. might be necessary. But if economic activity falls off because of y2k troubles, or if the railroads cannot manage with the normal interstate and international ordering/dispatch/switching systems disabled by y2k, there may be plenty of room on the rails but a diminished capacity to use it...Fred

-- Anonymous, February 06, 1999