INDY Committee Report
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SATISFACTORY PROGRESS
The Committee was encouraged by the situation in many areas. Some sectors in particular have taken the Year 2000 problem extremely seriously in the past 6 to 12 months and the results of their efforts were evident.
A critical part of Canada's essential infrastructure is made up of the energy sectors. These sectors started later than some others in resolving the Year 2000 problem and were faced with a complex embedded chip issue.
The Committee heard testimony from representatives of major stakeholders in the electrical sector and was informed that the North American electrical utilities will be fully Year 2000 compliant, complete with contingency plans, by the end of June 1999. It would appear that Canadian electrical utilities overall are ahead of their U.S. counterparts. Some of the more detailed information on specific utilities whose representatives appeared before the Committee include:
- Ontario Hydro has 84% of its 1,800 critical items Year 2000 compliant and expects to be fully Year 2000 compliant by June 1999.
- Nova Scotia Power will have all its mission-critical systems Year 2000 compliant by December 1998 and expects everything will be ready by June 1999.
- Hydro-Québec's Year 2000 remediation program was 77% complete as of October 1998 and expects to have fully completed its work by June 1999.
- Ottawa Hydro, as the representative of local electrical distribution utilities, confirmed that it was 72% complete and expects to be fully Year 2000 compliant by July 1999.
This industry exchanges information and discovered that it was less vulnerable than many others because many of its systems use analogue technology (operates without computers). In fact, only 1% to 2% of process controls were found to have problems.
The Atomic Energy Control Board confirmed to the Committee that the first deadline of October 1998 for key Year 2000 preparations had been met by the three utilities using nuclear power and that all necessary measures should be completed by June 1, 1999. The Committee was encouraged that, even with the high confidence level for the provision of uninterrupted electrical power, the electrical utilities are working with their communities, providers of essential services and the provincial/territorial governments to prepare contingency plans and emergency preparedness measures.
The representatives from this sector provided the Committee with a positive assessment of their Year 2000 preparedness. The Canadian Association of Petroleum Producers confirmed that virtually all of the larger producers have formal Year 2000 plans with the key target date for many oil and gas producing companies being December 31, 1998. Some of the smaller oil and gas companies, representing less than 6% of production, are not as advanced. The Canadian Gas Association (CGA) reported that all its members had formal Year 2000 plans and that core activities would be completed by December 1998 with some remediation and implementation efforts continuing into the second quarter of 1999.
This sector discovered that embedded chip problems are not as prevalent as originally thought. The oil and gas producers' contingency planning uncovered the possible lack of trained personnel to operate their systems manually. The CGA members are well along the way in terms of contingency planning, both within the individual companies and across the industry, and they have an emergency response organization. The Committee was encouraged by the progress made by this sector.
The telecommunications sector, which is a crucial element of Canada's infrastructure, has maintained its earlier aggressive posture in tackling the Year 2000 problem. The Committee was told that, within Canada:
- This sector anticipates 99.9% reliability on the roll-over.
- Stentor confirmed that 85% of public telephone and 90% of data networks are Year 2000 compliant. Full interoperability testing for wireless and wireline services will be completed by February 1999. Stentor expects to be fully Year 2000 compliant by June 1999.
- Bell, in its letter to the Committee, dated December 2, indicated that as of the end of October 1998 it had completed 90% of its Year 2000 work, that 98% of its services and products would be Year 2000 ready by March 31, 1999, and that it is preparing contingency plans.
- The Canadian Radio-television and Telecommunications Commission indicated that the 100 companies they contacted expected critical systems to be compliant by June 1999.
In terms of satellite and international communications, Telesat Canada informed the Committee that, except for a few items, it is Year 2000 ready and that it is establishing contingency planning. Teleglobe, which deals with international submarine communications, indicated that its Year 2000 completion schedule was to complete its conversion and unit testing by March 31, 1999 and to complete interoperability and contingency planning by June 1999. Teleglobe is currently reviewing the Year 2000 preparedness of its international partners (280 carriers) of whom it estimates 50%, mostly in Central and South America, Africa and Eastern Europe, have serious problems.
The Committee was encouraged by the progress made by this sector and fully expects that local telecommunications and long distance calls within North America will continue uninterrupted through to the new millennium. The successful Year 2000 remediation in this sector is particularly important since the other sectors must use telecommunications in testing and telecommunications is key in emergency preparedness.
The Committee had an opportunity to examine more modes of transportation than in its initial review of this important facet of the Canadian economy. Most of the areas in the transportation sector face a severe problem with embedded chips but have made significant progress and should be ready before the new millennium. As with other sectors, smaller companies remain a potential problem.
The Air Transport Association of Canada (ATAC) outlined to the Committee that this industry would be Year 2000 ready on schedule. It stressed that safety remains the paramount issue and that aircraft will not fly unless it is safe to do so. In the next three to six months, this sector's efforts will be shifting to three areas: testing (end-to-end testing), contingency planning, and public communications and awareness. As part of the industry's remediation action, larger airlines are helping their affiliated regional airlines.
Air Canada indicated that its Year 2000 work was 90% complete, including all its critical systems. Air Canada will be conducting end-to-end testing with its partners in centres across Canada between February and April 1999. The company is refining its business resumption plans, contingency plans and emergency preparedness, and is working on a communication plan.
Canadian Airlines International indicated that it was on track for its Year 2000 compliance. Seven of the Airline's sub-systems are scheduled for completion by the first quarter of 1999. Canadian Airlines International is focusing on its key suppliers, those with flight critical items, to ensure that they are also working on Year 2000 compliance.
Nav Canada confirmed that all of its systems will be Year 2000 compliant by April 1999, while mission-critical systems are already compliant. Nav Canada will continue to work with its four bordering air navigation service providers in the U.S., U.K., Iceland and Portugal and will be doing end-to-end testing to ensure full functionality.
It was mentioned that smaller airports and carriers are not very automated, have fewer embedded systems, and generally have a less onerous task in becoming Year 2000 compliant. To assist smaller airports, ATAC provides a complete Year 2000 toolkit.
ATAC confirmed that the air transport industry has a high level of confidence in Year 2000 preparedness in terms of navigation control and airports within North America. Worldwide, the International Air Transport Association is covering the Year 2000 issue. It was noted that Europe has a good program and that major Asian airports are working on solutions. Some problem pockets remain, mainly in less developed countries.
Canadian National (CN) informed the Committee that 95% of its environment supported by information technology is Year 2000 compliant and that 60% of embedded systems are corrected, with the balance to be completed by December 1998. In terms of external contacts, CN has sent out 9,000 letters to its customers and partners reviewing their need to be Year 2000 ready. As part of its contingency plan, CN will be stockpiling certain key items.
The Canadian Coast Guard (CCG) explained that the Department was 62% complete in terms of Year 2000 readiness as of October 1998, and that its critical systems were 74% complete. Year 2000 work will be done for CCG's critical systems by December 1998 and for related systems by March 1999. Only 133 items of the 3,100 susceptible items, with embedded chips, checked so far needed to be replaced in order to be compliant. The Department is working on contingency plans but is concerned about its dependency on external suppliers and service providers.
The Canadian Ship Owners Association indicated that its members were active in becoming Year 2000 compliant. Each company has separate teams and budgets for the Year 2000 issue and is well into the action plan phase. It was mentioned that some U.S. ship owners are not sailing on January 1, 2000 to avoid potential criminal and or legal liability. One unknown in this area is with respect to the Year 2000 readiness of the numerous foreign ships that use Canadian ports.
The Committee heard from the Canadian Trucking Alliance (CTA), representing 2,000 carriers, that an informal survey of CTA members last summer had shown that most carriers had either finished their testing or were in the process of testing. It tended to be CTA's smaller members who were not yet working on the Year 2000 problem. Large companies rely on customized systems and require significant effort to become Year 2000 compliant while small companies typically use off-the-shelf systems and plan on replacing them. This sector's critical milestones vary but real-time systems should be on-line by spring and summer 1999. It would appear that this industry has not yet prepared contingency plans.
The Committee received written updates from some major automobile manufactures that it had heard from last spring. This sector has been working diligently on the Year 2000 problem, including working with its supply chain, and has made steady progress. According to the available information it would appear that the automobile sector will be Year 2000 ready.
- Chrysler Canada: The company has achieved 86% Year 2000 compliance in manufacturing with the balance to be done by the end of June 1999. In terms of non-manufacturing activities, Chrysler Canada has 84% Year 2000 compliance for internal systems and 59% compliance for systems that deal with its partners.
- Toyota Canada: Toyota will have its most critical applications Year 2000 compliant before the end of 1998, with others to be completed by early 1999. The company is working with its dealers to ensure that they are aware of the significance of the Year 2000 issue in their own businesses. Toyota Canada is working with all key suppliers, carriers, information technology partners, and other affiliated companies, to ensure that they will also be fully Year 2000 compliant.
The Committee heard from the Insurance Council of Canada that 88% of insurance companies, representing 98% of policies, would be Year 2000 compliant by the end of December 1998. Insurance companies are now concentrating on contingency plans.
The Canadian Bankers' Association (CBA) explained to the Committee that banks have started the external testing phase, which is scheduled for completion by June 1999, at which time banks will be fully Year 2000 compliant. The CBA wanted Canadians to be reassured that bank balances and other financial information will not be lost and that banks are preparing business recovery and resumption plans - including possible industry-wide disruption. Internationally, the CBA is looking at the 200 international banking systems and checking with their partners.
The Office of the Superintendent of Financial Institutions Canada (OSFI) explained that its July survey showed that the financial industry will have spent $2.5 billion on this project, most of which will be completed by the end of 1998.