April 19, 1999
Cover

READY OR NOT

Services and sectors plan to beat Y2K, but there will be glitches

BY WARREN CARAGATA with SUSAN OH in Toronto

It has devoured hundreds of millions of dollars, consumed the work lives of tens of thousands of programmers, spawned an industry of specialists devoted to repairing and testing computer systems, and sparked endless debate about the reliance on technology. But for most Canadians, the issue of the Y2K computer bug boils down to one basic question: will this affect my life? Unfortunately, there is no equally simple answer; there may be glitches and there are no guarantees. Simply put, in the world of Y2K, bigger is better. Smaller companies, smaller municipal governments and smaller hospitals have fewer funds to throw at repair efforts, which involve rewriting programs so they can properly handle dates in the new century, and replacing computer systems that cannot be fixed. In some cases, smaller means further behind.

Yet, with those caveats, most key sectors in Canada expect to be prepared for the clocks to tick over at midnight on Jan. 1, 2000. To assess the state of the race to defuse Y2K, Maclean's surveyed key business and government sectors across the country. Here are the results:

UTILITIES

Despite earlier concerns about Y2K blackouts, it now appears the power will be on. Hans Konow, president of the Canadian Electricity Association, says utilities are making good progress in tackling Y2K problems, at a cost of about $250 million. On average, 80 per cent of computer systems used by utilities have already been fixed and tested and the remaining work will be completed by the end of June. "This is not going to be a crisis," Konow says, and he sees no need for consumers to buy portable generators.

Most utilities have watched clocks successfully roll over to the year 2000 to test their systems, says Francis Bradley, vice-president of the Canadian Electricity Association. Two hydro and two coal-fired plants have done so in Ontario. Nova Scotia Power has also been running clocks in 2000 at all major stations.

Utilities in the industrial heartland of Ontario and Quebec say they are well advanced. Much of the country's electrical infrastructure, including generating plants, long-distance transmission and local distribution, predates computer technology, says Bill Imms, a senior official in the Y2K project office of Ontario Power Generation Inc. (part of the former Ontario Hydro). "As long as Niagara Falls keeps falling over the edge of the cliff," he says, "we have the potential to create power. There's not a lot of technology there." Hydro Quebec also says it should be immune to Y2K.

While hydro plants are largely free of computerized equipment, nuclear plants -- in operation in Quebec, Ontario and New Brunswick -- are chock-full of them. Kurt Asmis, director of safety evaluation for the Atomic Energy Control Board, the federal nuclear regulator, says the three utilities running nuclear stations have all shown that the country's 14 active reactors can be safely operated -- and safely shut down once the year 2000 arrives. The AECB demanded proof by the end of 1998 that reactors would be able to supply power safely and successfully in 2000. "That's been demonstrated," Asmis says.

Despite all the reassurances, one potential risk cited by Edward Yardeni, chief economist for Deutsche Bank Securities in New York City and a leading Y2K critic, is the power grid, which ties North American utilities together in four large interconnections. "A major disturbance within one part will rapidly have an impact throughout the interconnection and has the potential to cascade," Yardeni says. Canadian officials say the grid is built to handle outages, and note that it was unaffected by widespread electrical failures during last year's ice storm in Quebec and eastern Ontario. However, a recent report from the North American Electric Reliability Council, which monitors the continent's electrical supply, did acknowledge that "the strength of the overall system may only be as strong as the weakest link."

Not everyone has faith the power will be on. Portable generators are flying off the shelves -- due to uncertainty about both Y2K and the weather.

OIL AND GAS

Almost as important to Canadians in winter is the supply of natural gas and oil products. At TransCanada PipeLines Ltd., which runs the only national gas pipeline, all critical systems will be fixed and tested by the end of June, says spokesman Dave Liderth. The Canadian Gas Association says the industry does not expect any problems. At Petro-Canada, one of the largest Canadian oil companies, "it will be business as usual" as the new year begins, says Brian Brenneman, the company's Y2K project director.

TELEPHONES

Alex Giosa, who heads the Y2K office at Stentor Canadian Network Management in Ottawa, will be watching New Year's unfold from the phone industry "war room" that will be set up in Stentor's Ottawa operations centre. From there, he will have a jump on Y2K's impact because Stentor has arranged an early warning system -- it will check in with phone company officials in New Zealand, one of the first countries that will experience the new year. "We will get 18 hours warning," Giosa says. He will also be watching what happens as clock hands pass midnight in Newfoundland's time zone. Stentor will have triple the staff normally on duty, not just for the New Year's rollover, but also when the leap year hits on Feb. 28 and 29. As this is the first leap year opening a new century in 400 years, many systems may fail to recognize the extra day -- unless they have been reprogrammed to do so.

Dates do not affect the routing of calls, Giosa says. But the phone system does use them in a mountain of computer programming code -- 200 million lines of it -- to manage and monitor the network, bill customers and handle calling cards. The Canadian voice network was fixed at the end of 1998. By the end of June, billing systems will be reprogrammed so that someone who starts a call at five minutes to midnight on Dec. 31, 1999, and ends it six minutes later, on Jan. 1, 2000, doesn't get a bill for a 100-year call.

At Bell Mobility, which handles cellular phone calls in Ontario and Quebec and processes bills for the national Mobility Canada network, the company says its Y2K problems will be repaired on time. "We are confident of the ability of our network to process calls," says Dave Lazzarato, a senior vice-president. Rogers Cantel Mobile Communications Inc., which operates a national cellular system, was less forthcoming. "We're somewhat hesitant to comment," says David Robinson, vice-president of investor relations for parent company Rogers Communications Inc. (which also owns Maclean's). However, the company's Web site says 82 per cent of Cantel's Y2K effort is complete.

BANKING AND FINANCE

The big Canadian banks are also setting up year 2000 war rooms at their data centres. Hotel rooms in Toronto and other cities have been booked for the extra staff on duty and senior executives will be staying close to the phones. At the Royal Bank, vice-chairman Gord Feeney will be on call, while chairman John Cleghorn will be ready to make decisions from his cottage in the Eastern Townships of Quebec if there are problems. Computer systems at the banks will be primed to deal with an expected flood of account inquiries as customers check their bank balances before the century changes.

All financial records will be copied to magnetic tape on Dec. 31 as a precaution and extra cash will be available to keep banking machines full, says Frank Riddell, chairman of the Y2K working group of the Canadian Bankers Association and project manager for the Y2K effort at Toronto Dominion Bank. From their perch, TD Bank officials will be watching customer credit-card transactions in parts of the world where New Year's has arrived. They want to see whether the system is working as promised before the rollover hits Canada. Staff will also be sent to some branches on Jan. 1 to make test transactions -- and to ensure they can get into the buildings.

Banks get high marks for Y2K preparations from the federal banking regulator, which says more than 90 per cent of institutions met its Dec. 31, 1998, deadline for the repair of so-called mission-critical systems, including banking-machine networks and software used to manage mortgage and customer accounts. Riddell says systems that tie the industry together -- including the networks for cheque-clearing, credit-card and debit-card payments -- have also been fixed. "But there's still a lot of testing to be done," he says.

The investment industry is also in good shape, having successfully run preliminary tests on its systems last month, checking the ability to make trades and settle orders. A similar test for bond-market trading showed Y2K problems had been fixed, said Randee Pavalow, head of the Y2K committee of the Canadian Securities Administrators.

AIRLINES

The airline industry's biggest Y2K problem may be convincing travellers they can fly without fear during the New Year's period. To bolster confidence, China made news this year by ordering its airline executives to be on flights as the new century begins.

Air Canada, which expects to spend about $40 million on Y2K fixes, including upgrades to navigation computers and systems used for ticketing and other operations, says flying jitters are unwarranted. Boeing, Airbus and Bombardier have all "certified to our satisfaction that they are compliant," says Lise Fournel, the airline's vice-president for information technology. The U.S.-based Air Line Pilots Association, which represents pilots at 51 airlines, including Canadian Airlines, expects nothing scarier than some scheduling delays. "Our impression is that we're not going to have radar screens blink out at one minute after midnight or have planes crash into each other," says spokesman John Mazor.

Safe air travel relies on functioning air traffic control. In Canada, that is the responsibility of Nav Canada, a nonprofit organization. The systems were repaired last year, says David Honkanen, its Y2K project director. Nav Canada is taking part in joint tests with controllers in the United States, Britain, Portugal and Iceland. Honkanen is confident enough about the system that he will be in the air over New Year's, taking a flight to London on Dec. 31.

It's one thing to fly to London, but it may be another to fly to parts of the world where Y2K problems have received less attention. The International Civil Aviation Organization has expressed concern about Russian-made aircraft. Airlines will be deciding later this year which overseas routes are safe, based on information from the International Air Transport Association. IATA spokesman William Gaillard says the association does not expect any major problems. Now, all the industry has to do is persuade its customers to fly.

THE FEDERAL GOVERNMENT

Like most big organizations, the federal government is concentrating attention on what it calls "mission-critical" systems: the things it absolutely has to do, such as pay its employees, provide pension and employment insurance cheques, defend and police the country, and collect taxes. Those systems, says Linda Lizotte-MacPherson, Ottawa's chief information officer, will be ready on time, although there could be some problems that she insists will be repaired quickly.

Yet some insiders say the government is failing to meet its own deadlines. All critical systems were supposed to be fixed and tested by Dec. 31, but only 82 per cent of projects met that goal. And while the government expects to have all systems ready for more thorough testing by June 30, some departments will not be ready until October. Ottawa's latest readiness report for the end of February shows an 88-per-cent success rate. Systems still not repaired include the foreign affairs department's network for communicating with embassies and the Laboratory Centre for Disease Control.

Another important laggard is the defence department, which has the job of coming to the country's aid next year in the event of Y2K failures. The department has only 84 per cent of its work done on its 880 systems -- including command and control operations that pass orders and information between headquarters and military bases. Work will not be finished until Sept. 30. That may sound late for a department that is supposed to be ready to help everyone else. But Lt.-Gen. Raymond Henault, deputy chief of the defence staff, says the department will be Y2K-ready, with so-called work-arounds that will allow it to get the job done in other ways if systems cannot be repaired in time.

Government Y2K officials received a sneak preview of what might happen next year when the government began fiscal-year 2000 on April 1. Although information was still being compiled, "so far, it's going smoothly," says Jim Bimson, the head of the departmental readiness branch of the Treasury Board's year 2000 project office.

MUNICIPALITIES

Many key essential services, including water and sewage treatment, fire and police services, are provided by the more than 4,000 cities and towns of Canada. Interviews with Y2K officials in major cities suggest a high degree of confidence that computer programs will be repaired in time. Police, fire, 911 and ambulance systems are either ready or will be soon.

But there are concerns, says Al Aubry, general manager of year 2000 services at IBM Canada Ltd., that some municipalities, particularly smaller ones, are behind in the race. Yet James Knight, executive director of the Federation of Canadian Municipalities, says his discussions with officials across the country, as well as internal surveys, have convinced him that essential services will be provided without any serious interruptions at the start of next year. "They will be there," Knight told Maclean's. If there are problems, he says, they will most likely affect the municipal administrations, not the services they provide. For instance, water and sewage treatment plants can be run manually. Traffic lights, Knight says, turn red if their computerized controls fail -- a prescription for tie-ups, but hardly the problem there would be if they shut down.

In eight provinces, the RCMP provides local policing. The Mounties have completed more than 90 per cent of their Y2K work, with some minor reprogramming to be finished by April 30. As a precaution, the RCMP has cancelled all leaves from Dec. 27 until March 15, 2000, and other forces have similar plans, although Toronto police Chief David Boothby says he does not expect an increase in crime. "It's better to be prepared and nothing happens," Boothby says, "than not be prepared and something happens."

As in other provinces, the Ontario government is making sure every municipality has its own emergency plan, says Doug Harrison, deputy director of Emergency Measures Ontario. While some towns and cities -- which Harrison declined to name -- had been doing no contingency planning, now "every municipality is starting to work."

But there is little time to spare. The question remains whether every hamlet, hospital and government in this country can have all systems ready for the clocks to strike midnight on Jan. 1.