Moody's expects no big Y2K blackouts

Tuesday, 14 December 1999 3:36 (GMT)

(UPI Focus)

NEW YORK, Dec. 13 (UPI) - The potential for liability and the scrutiny of government regulators has a major Wall Street research firm convinced there will be no major power outages in North America on New Year's Day.

Moody's Investors Service said Monday that it was confident the power grid would experience no serious disruptions due to Y2K computer problems.

"Moody's is not predicting there will be no Y2K-related events, but instead we are stating our view that the power grid will provide adequate power on Jan. 1, 2000," the report stated. "Minor glitches may occur, but should not have serious consequences and will be dealt with expeditiously."

An impending collapse of computer-controlled utilities has been part of the worst-case scenarios circulated in the months leading up to the year 2000. Moody's said, however, that the electricity industry has "met the challenge."

Moody's said in an October report it was confident the grid would continue humming on Jan. 1 and reiterated that conclusion Monday with the new year less than two weeks away.

In November, the North American Electric Reliability Council, the organization that represents the regional power distribution systems in the U.S. issued a report stating that the nation's bulk power supply was ready for Y2K. Moody's said similar reports had been issued recently by the Nuclear Regulatory Commission and the Canadian Electricity Association.

Moody's said the potential liabilities of a major outage and the growing competitive nature of the electricity market provided the power industry with ample incentive to prepare for Y2K. "Avoiding Y2K problems is good customer service," the report said .

Government regulators in the U.S. and Canada have also taken a strong and active interest in making sure that the power companies are ready for Y2K, which Moody's said may have been a reason the entire industry addressed the Y2K issue.

"Utilities themselves may have been just as prepared without regulatory oversight, but growing financial pressures from restructuring could have caused some of the industry's weaker players to be less attentive to the need to prepare," Moody's theorized.

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Ray

-- Ray (ray@totacc.com), December 14, 1999

Answers

Since NERC is a trade group and not a government agency, this statement by Moody's seems a bit of a stretch! Also, NRC came to their conclusions based on utility self-reporting, plus some very short (3-day) audits of nuclear plants.

As for liability, are utilities really liable for failure to supply electricity? They don't get sued over normal outages, do they? The management might assume that fix-on-failure is viable, and that any outages will be short. In that case, they may not be worried about liability.

-- You Know... (notme@nothere.junk), December 14, 1999.

This is the same kind of reasoning that says the potential for going out of business is sufficient to have ALL of the corps, large and small, fully remediated. We KNOW that this is not the case, in at least the SME's. Same reasoning, demonstrated major flaw in the parallel, probably same conclusion???

C

If A then B (and B happens to be false)

If C then D (using same framework, D would be false also)

-- Chuck, a night driver (rienzoo@en.com), December 14, 1999.

Well, that settles it. We can ignore this thread that was posted yesterday then right?

-- Larry (cobol.programmer@usa.net), December 14, 1999.

Oops, it was posted on the 12th.

-- Larry (cobol.programmer@usa.net), December 14, 1999.

I am amazed and astonished that a relatively sophisticated organization like Moodys would attempt to answer an engineering question without doing engineering or direct that the organizations responsible had done it.

We have two SALES AND POLICY LOBBING organizations statements, and the NRC's CONFERENCE ROOM AUDITS to base this on. Further NERC got caught in its own lies when it wrote the test report months before running the test (which tested communications not power).

The grid may or may not stay up, but there is no basis for knowing by listening to Moodys, the North American Electric Reliability Council, the Nuclear Regulatory Commission and the Canadian Electricity Association. I personally think Mr. CEO's assessment, that dirty power and scheduled outages would be a home run, is closer to the truth.

(p.s. I know Mr. CEO and I know he has the engineering data to base that statement on.)

(p.p.s. If the grid does stay up, it will be because of good hard work on the part of real engineers whose experience is nowhere present in all this hype and spin. I hope that is because they are taking an overdue vacation having spent a couple of years at assessment remediation testing and reintegration.)

-- ng (cantprovideemail@none.com), December 14, 1999.

"As for liability, are utilities really liable for failure to supply electricity? They don't get sued over normal outages, do they? The management might assume that fix-on-failure is viable, and that any outages will be short. In that case, they may not be worried about liability."

I received this in an electric bill from ComEd:

The Illinois Public Utilities Act, Section 16-125(e) and (f) allows customers to receive payment for certain damage resulting from:

-- certain continuous power interruptions of four hours or more that affect more than 30,000 customers; and

-- certain power surges or other fluctuations that affect more than 30,000 customers.

ComEd may be exempted from liability for damage when when the power interruption, power surge, or fluctuation is caused by:

-- weather events or conditions;

-- customer tampering;

--civil or international unrest or animals; or

-- an individual who is not a ComEd employee, agent or contractor.

(snip)

I'm assuming that these laws vary by state. I'm also expecting any possible outages to be a result of tampering, unrest, animals &/or weather. ;-)

-- Deborah (infowars@yahoo.com), December 14, 1999.

A little background...

Moody's is, according to their website (http://www.moodys.com/) "The leading provider of independent credit ratings, research and financial information to the capital markets."

One of Moody's core businesses is, for a fee, providing companies and governments that issue bonds with a credit rating for those bonds. That rating determines the 'cost of credit' and Moody's clients include virtually all major bond issuers, including utilities.

Question: What exactly would you expect Moody's to say about their client's Y2K preparations?

Question: How many engineers does Moody's have on staff?

Question: How did Moody's rate Orange County, Indonesia and Thailand (just to name a couple of examples) before those issuers went boom?

-- Midas (Midas_Mulligan_2000@yahoo.com), December 14, 1999.

Having a financial services firm give opinions on electric utilities is about as credible as having NERC babble about the stock market.

The NERC tests were frauds and most informed people know that by now.

Electricity and oil...the two factors everything hinges upon.

-- Irving (irvingf@myremarq.com), December 14, 1999.