REPORT FROM THE COMMISSION TO THE COUNCIL, THE EUROPEAN PARLIAMENT, THE ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS - EU Infrastructures and the Year 2000 Computer Problem - Q3 1999

Table of Contents

1 EXECUTIVE SUMMARY

2 INTRODUCTION

3 ENERGY

3.1 Electricity

3.1.1 Overview

3.1.2 Preparations in the EU

3.2 Natural Gas

3.3 Oil

4 NUCLEAR SAFETY

4.1 Overview

4.2 International Activities on Nuclear Safety

4.3 EU Nuclear Safety

4.4 Nuclear Safety in Central and Eastern European Countries (CEEC) and New Independent States (NIS)

5 TRANSPORT

5.1 Aviation

5.1.1 International Activities in the Aviation Sector

5.1.2 Preparations in the EU

5.2 Maritime Transport

5.3 Rail Transport

5.4 Road Transport

6 TELECOMMUNICATIONS

6.1 Key risks/threats/dependencies

6.2 Contingency planning and rollover preparations

6.3 Strategy for communication with public

6.4 Co-ordination activities

6.5 Preparations in the EU

7 FINANCE

7.1 Information disclosure and Y2K readiness

7.2 The European System of Central Banks (ESCB) and the European Central Bank (ECB)

7.3 The TARGET system

7.4 Central banks and Y2K financial risks

7.5 Payment systems

7.6 Retail and wholesale liquidities and related infrastructures

7.7 EU banks and credit policy

7.8 EU Stock Exchanges

7.9 The EU insurance industry

7.10 The macro-economic impact of Y2K

7.11 International preparations

8 WATER

9 COMMISSION ACTIVITIES

9.1 Internal Situation:- see also : http://europa.eu.int/comm/y2k/preparation/y2k_en.htm

9.2 External Activities:- see also http://europa.eu.int/geninfo/keyissues/y2k/index_en.htm

10 CONCLUSIONS

10.1 Public Confidence

11 ANNEX

1 EXECUTIVE SUMMARY

In its final report of 1999 on EU preparations for the Year 2000 (Y2K) Computing Problem, the European Commission has compiled information from various sources, including EU governments and the Infrastructure Providers Workshop which it hosted at the end of September 1999.

Countries and sectors throughout the EU now report that their preparations are essentially complete, and that the rigorous contingency plans which they have established to cope with exceptional events have been tested and reinforced to cope with possible Y2K problems. They consider themselves to be ready and expect no material disruption to their operations. Their confidence is supported by the unprecedented degree of industry and private-public collaboration which has taken place during 1999 to address this issue. Indeed, many believe that their ability to detect and respond to problems which may occur at year end is now greater than at any other time.

Nevertheless, although dealing with the technical problem at the root of the "millennium bug" has been a generally straightforward, if resource-intensive and time-consuming, task, resolving the related business and political issues has been much more difficult. It is in this area where certain issues remain.

Having achieved individual readiness, organisations must then ensure the reliability of their supply chains. Understandably, given the difficulty and expense of auditing other companies, the determination of external supplier compliance is a process which is frequently obliged to rely upon unvalidated supplier claims. This increases the need to have effective business continuity plans in place. Equally important is the exercising of these plans under various simulated conditions. Those who have already carried out this step confirm the benefits of training and drilling in real-life situations.

As organisations finalise their contingency preparations during the final quarter of 1999, many plan to implement internal "crisis cells" or "command centres", joining sectoral, national and global networks to exchange information on the situation. In general, these efforts are focused on the critical period following midnight on 31 December 1999. Nevertheless, normal operations and peak loads may not occur until the first working day of the year, with the full impact of any problems requiring days, weeks or even months to become apparent. Organisations should thus consider retaining a certain increased level of monitoring and capacity to react throughout next year.

The intensive remediation and replacement of IT systems which has taken place during 1999 has already resulted in numerous reports of the millennium bug "biting". It seems inevitable that widespread changes to IT systems on such a large scale will create its own problems, many of which are only indirectly attributable to the Y2K problem itself. At this stage, the effect is primarily irritating, but an increased volume of such incidents occurring during a short time period may place a heavy demand on resources, and possibly lead to unjustified concerns regarding the actual effect of the Y2K problem.

The uniqueness of the Y2K problem lies in its global, pervasive nature, and the inability to predict its ultimate consequences. This uncertainty, both in terms of the impact of the problem and of the reaction of the public, is now the greatest concern in the EU, as elsewhere. Thus far, the EU public appears to feel sufficiently well informed but not unduly concerned, and this situation is undoubtedly due to the intensive efforts made by governments and industry to provide them with reliable and useful information.

The key to retaining public confidence during the run-up to the new millennium, as well as at the beginning of next year, will depend upon the close monitoring of public and media opinion, and managing their expectations. A successful communication strategy will require a sustained continuous effort from the many organisations involved, working together.

A final concern of governments is the possibility of serious disruptions occurring in less prepared countries. The normal humanitarian organisations have recognised this possibility and are gearing themselves up to provide aid if it should prove necessary. At the same time, there may be a need to assist these countries in restoring normal services. The International Y2K Co-operation Centre, working with various governments and organisations, including the G8, is examining how support for reconstitution efforts could be made globally available.

2 INTRODUCTION

The final report on EU preparedness for 1999&

In its final report for the third quarter of 1999, the European Commission provides an overview of the current situation of major infrastructures in the EU, highlighting their preparations and identifying how issues are receiving attention. These communications have been produced on a quarterly basis since December 1998 and reveal how the situation continues to progress and evolve.

&contains information collected from both the public and private sectors&

Once again, the report contents are based upon information provided by the relevant administrations, regulatory and supervisory authorities in the Member States, as well as by European and international associations. Countries which made specific contributions include Austria, Belgium, Denmark, Finland, Germany, Greece, Ireland, Italy, the Netherlands, Spain, Sweden, and the UK. Substantial information was collected during the Infrastructure Providers Workshop hosted by the Commission at the end of September 1999. The overall reporting timeframe was September to mid-October 1999.

&with a particular focus on cross-border issues and activities

The particular industry sectors to be reported on were selected for their economic and social importance, and their relevance in a cross-border context. In this respect, it is important to note the collaboration which has taken place within the EU between the government and industry bodies dealing with the Y2K problem. Regular workshops have been hosted by the Commission since 1997. The Cologne Summit conclusions requested the Commission to convene a high-level working party to "&put forward proposals for strategic decisions which may be required within the European Union to ensure the proper functioning of essential areas of infrastructure should computer problems arise in connection with the change of millennium."

Close collaboration on Y2K matters continues to take place within the EU&

This group has now met on three occasions and discussed various issues, including nuclear safety, strategies for communication with the public, consistency between national contingency plans, and the implementation of a communication system between EU Member States during the rollover period. It will continue to meet on a monthly basis until the end of the year, and possibly thereafter.

&with the Commission acting as a facilitator for the exchange of information

The role of the Commission is to facilitate the exchange of information on the Y2K problem by collecting and publishing information. It is not possible to carry out an independent assessment of the information which has been received. Moreover, the infrastructure sectors described in this report are interdependent, and within the EU, such organisations may be publicly owned or private, some are closely regulated, and in certain countries there will be a single major player, whereas in others there may be hundreds of companies of various sizes.

This EU overview suggests links to sources of more detailed information

It is thus inevitable that in such a report at EU level, the overview of the preparedness of these sectors must remain rather superficial. It is for this reason that an extensive list of website addresses is included in the annex, for those interested in specific organisations and sectors to obtain more detailed information.

3 ENERGY

3.1 Electricity

3.1.1 Overview

The EU electricity supply industry reports that it is essentially ready&

The electricity supply industry reports that their remediation efforts to ensure that systems are Y2K compliant, to the extent which this is possible, are now complete, or nearing completion. Their current work thus concentrates on finalising contingency plans. In fact, the electricity supply industry, which must continually match the supply of electricity with demand under constantly changing conditions, normally operates on a de facto contingency basis, although much greater attention is now being given to the date change period.

&as a result of extensive preparations and active co-ordination at European level

The electricity supply industry in Western Europe, as represented by Unipede / Eurelectric and UCTE, recently reaffirmed their commitment to "Business as Usual" in the supply of electricity and the maintenance of electricity supply quality. Behind this commitment are extensive preparations which the industry has been undertaking over a number of years. These have been described in detail and co-ordinated between supply companies through the regular quarterly meetings organised by the industry association, Unipede/Eurelectric, with the most recent meeting held on 15 September.

There is agreement to maintain cross-border electricity flows during the rollover period

With respect to electricity links between countries, a policy has been agreed within UCTE for these connections to be maintained in operation, though with minimum electricity flows at the rollover period. This is consistent with contractual and other obligations, so that electricity flows can be increased if assistance by one party is required. This policy has also been adopted by the CENTREL grid, which is connected to the UCTE grid, with similar arrangements also being applied to the separate Nordel grid.

Continuity of electricity grids has been an issue of particular concern&

The importance of maintaining the continuity of the electricity grid, which is an essential link in the supply chain from power stations to customers, has been recognised. Moreover, the sudden loss of several large generating units, or of very large customers, would tend to destabilise the grid, which, if seriously affected, could create further problems. Due to the importance of the grid to electricity supply, the Commission organised a workshop in Brussels on 22 July with the major grid operators across Europe, including the CEEC and NIS and other interested parties, for a comprehensive discussion on this particular issue.

& with respect to the potential impact of grid failure on nuclear power plants

An additional consideration is that potential instabilities in electrical frequency could be induced by large losses. These instabilities could cause power plants to disconnect from the grid, thus further reducing supply and increasing the risk of disruption of the grid. Such disconnections of a nuclear power plant (NPP) would require stand-by electric power (alternative grid connections and local back-up generators are standard features of any NPP) to be activated to support the essential functions of the NPP. A similar workshop on electricity grids, and in particular the interface with nuclear power plants for CEEC and NIS, was organised by the IAEA in Bulgaria on 13-15 September.

Contingency plans to ensure grid continuity include back-up telecommunication facilities,&

The results of these workshops have demonstrated that the electricity supply industry is fully aware of the key importance of maintaining grid continuity, including the particular issues relating to NPPs, to which they have been devoting much attention. In general terms, electricity grids are electro-mechanical in nature and not directly date sensitive, although information and control systems may be. Efforts have therefore been focused on such systems, and on communications in general, which are essential to the operation of electricity supply. Electricity firms are organising back-up communication facilities in addition to the dedicated networks which are typical of the industry, to ensure continuous operation in the event of the congestion or failure of externally provided communications.

&additional reserve generating capacity and fuel stocks,&

Other measures are also foreseen. Reserves of instantaneously available generating capacity (spinning reserves) will be considerably increased above normal margins, to cope with the possible failure of an on-line generating plant. The reserve generating capacity will be diversified in terms of both fuel and location, to give additional security and to minimise possible strains on electricity grids. Supplies of different fuels for generating plant and fuel stocks will be assured. Planned outages of plant or other key items such as transformers will be avoided as much as possible, with maintenance completed well beforehand. Reports also indicate that staffing will be significantly increased for the rollover period, with experienced staff trained in contingency situations, and the plans themselves tested through drills. These contingency plans must be capable of dealing with external failures such as in telecommunications or fuel supplies, as well as internal failures.

&and working with customers to minimise significant fluctuations in demand

With New Year's Day falling on a Saturday and forming part of a holiday period, electricity demand is expected to be significantly below winter peak levels, when industry and commerce is in full operation. This will also depend on the weather, which in northern and central Europe can be very severe. Many electricity companies have been in close contact with their large consumers, to gain prior knowledge of their expected demand during the rollover period. Rapid fluctuations in demand are the most difficult to handle, hence the utilities are dissuading people from switching to stand-by generators just before the rollover, and then returning to public supply just afterwards, as this tends to destabilise the system. It is useful for electricity suppliers to know when demand will increase back to normal levels, on the 3 or 4 January, or even later, as industry and commerce return to normal levels of activity. Utilities are prepared for possible problems in these periods, as the infrastructure comes into use at full load for the first time in the new millennium.

Nevertheless, the wider public needs to be made fully aware of the situation and plans

The wider public and smaller enterprises need to be informed that the electricity supply industry is fully committed to business as usual and has undertaken very extensive measures to fulfil this commitment. To some extent, this is to discourage unusual behaviour which could in itself create problems, although this is less of a problem for electricity than other sectors. Nevertheless, the supply industry and national administrations must keep the public well informed.

3.1.2 Preparations in the EU

EU findings indicate that the Y2K impact on the electricity sector appears to be minimal,&

Many of the large electricity suppliers in the EU are now reporting the completion of their compliance activities. In Sweden, Svenska Kraftnät noted that very few serious problems had been discovered, indeed, none of their systems would have resulted in power supply interruptions or the disconnection of any grid component, even had no action been taken. To place this in context, they also reported that the normal average frequency of disturbances to the national grid alone is once every other day. These disturbances occur when an automatic protection system is activated and causes the disconnection of a grid component, which rarely leads to interruptions in customer supply. Similar findings are reported by other electricity companies throughout the EU.

&and Y2K is also unlikely to provoke problems in building heating systems

Sweden has also carried out a detailed examination of the possible impact of Y2K on district heating, which included an assessment of the risks associated with building systems used to control, regulate, and optimise the climate. They reported that non-compliant systems were discovered in approximately 6% of buildings. In particular, the study tried to identify non-compliant systems which would malfunction if no action was taken. In none of cases examined would such systems have resulted in a loss of heating, although there was a risk of financial consequences. The majority of the electricity produced in Austria is from hydroelectric power stations, which are considered to be less sensitive to the Y2K problem than thermal power stations, and moreover have a shorter start-up time following a breakdown. Scenarios and action plans have been developed to take into account different water levels, energy demand, grid problems and their effect on hydro power stations.

Some EU countries are also exercising their rollover plans

In Belgium, the electricity sector (all producers and the national grid) conducted a successful exercise on the 9/9/99 to test the organisation planned for the rollover. The objective was to ensure that all participants understood their roles and reacted appropriately to simulated events, and that communication worked effectively. A second rehearsal is scheduled before year-end to fine-tune the preparations.

3.2 Natural Gas

The gas sector has reached a similar state of preparedness

Natural gas is also considered a vital resource, especially for heating, and the gas supply industry in Europe has similarly devoted considerable effort to assure supply continuity. Again, remediation work by the supply industry in the EU is complete or nearing completion, with the emphasis now on finalising contingency plans. As with other major energy forms, and given the importance of energy supply as a whole, extensive contingency plans already exist for the gas sector and these form the basis of the plans for the millennium date change.

Given the EU's reliance on foreign gas supplies,&

Indeed, about 43% of the EU's gas supplies are imported, mainly from Norway, Algeria and Russia. Thus to assure normal security of supply, the substantial measures in place include storage, flexible supply arrangements with indigenous producers, and interruptible supply contracts with large consumers. These are being adapted as appropriate to deal with failures caused by Y2K. In addition, all vital installations will be manned, local emergency power supplies will be maintained on stand-by, alternative telecommunication lines and private radio networks are being established, and stand-by personnel will be reinforced.

&gas companies are working closely with external suppliers

With respect to upstream suppliers, the gas companies are in continuing dialogue with their external suppliers in order to exchange information, identify problems, and co-operate in finding solutions, with the overall aim of avoiding interruptions to gas flow. It has been confirmed that external suppliers are co-operating fully, and are reported to be addressing the issue very professionally.

The issue of cross-border compatibility between contingency plans&

One issue, first raised at Infrastructure Providers Workshop held in April this year with representatives of the gas supply industry in Europe, was the extent to which different gas supply companies' contingency plans are compatible with each other, particularly regarding cross-border flows in the event of possible interruptions to external supplies. The Commission wrote to the European gas companies' association Eurogas, seeking further assurances on this issue.

&is receiving attention at European level

In response to these enquiries, the dispatching officers of companies in the Eurogas member countries met to further discuss and co-ordinate their activities. In addition to confirming the extensive preparations which the gas companies have made, including special attention to critical services such as telecommunications, power supply, and upstream natural gas deliveries, the companies also reported on the enhanced preparation and co-ordination of their contingency plans, including the cross-border dimension.

3.3 Oil

In spite of the strong dependency on oil imports in the EU,&

Oil supply is equally vital to a modern economy, notably for transportation and heating. Moreover, net oil imports, mainly crude oil, account for about 80% of total consumption in the EU. However, a number of significant factors mitigate the risk of interruption to supply resulting from Y2K problems.

&significant oil stocks exist in accordance with EU legislation ,&

Firstly, crude oil and oil products are readily stored throughout the supply chain, including the storage of heating oil by domestic consumers. To ensure general security of supply, EU legislation requires Member States to store the equivalent of at least 90 days consumption of oil, held by the industry and/or specially created oil storage agencies. Further EU legislation covers the use and release of oil stocks and related measures in case of oil supply difficulties.

&there is great diversity in both supply and the supply infrastructure, &

A second factor tending to mitigate the vulnerability to Y2K of the sector is the diversity of oil supply, in terms both of companies operating in competition to supply consumers, and of supply infrastructure, which can occur by pipeline, rail, barge and road tanker. The third factor is, as with other energy supply industries, the very extensive work carried out over several years by the oil supply industry on remediation and contingency planning.

&and the extensive efforts of the oil industry should altogether reduce the impact of any supply disruptions

It is thus likely that component failures in supply systems which may arise from Y2K problems should be surmountable by the security stocks and other contingency measures in place. Nevertheless, there is a need to monitor the situation as the year end approaches, primarily due to the nature of the oil market. A key aspect is the role, in the short term, of market perceptions, and linked to this, the relative volatility of oil prices.

Nevertheless, managing public confidence is a key issue for the oil industry as well

It is therefore important that the oil supply industry takes the measures necessary to prevent shortages of specific products such as motor fuel, which could suffer from a surge in purchases as the year end approaches. More generally, the oil stocks and associated measures required under EU legislation should be in a high state of readiness, to be able to deal appropriately with any possible major supply problems, either internally or externally, which could arise around the date change period. Equally, the public should be informed of the very extensive measures in place for such an eventuality, in part to discourage possible harmful behaviour. The EU, and in a broader context the International Energy Agency (IEA), are currently examining these issues and the need for further steps, such as prior agreement on stockdraw in certain circumstances, which may be required to address them.

There is previous experience in coping with interruptions to oil supplies

As an example, Irish Department of Public Enterprise has a role in response to oil supply disruptions generally. In addition to the maintenance of formal national plans (currently under review) to deal with major supply disruptions, the Department has a proven capability to facilitate the co-ordination of an industry-wide response to more localised interruptions. This response draws on the expertise and resources of the oil companies, individually and collectively, the Irish National Petroleum Corporation 's trading and refining operations and the National Oil Reserves Agency. These arrangements have provided a flexible and effective response to the two serious interruptions in oil supplies which took place in recent years, and would be capable of speedy implementation in the event of a residual Y2K disruption.

4 NUCLEAR SAFETY

4.1 Overview

There is a potential impact of Y2K on nuclear safety

There are a number of potential problems in nuclear power plants (NPPs) relating to safety that can be associated with the Y2K problem. The first of these are the direct safety issues, which concern the software, hardware, and embedded chips used in safety-related systems. The relationship between power plants and the electricity grid or other generation facilities may also induce problems. Should grid problems arise, it is important that back-up mechanisms, such as batteries and diesels, operate to ensure emergency electricity supply to cooling systems. Finally, there are also concerns that multiple failures, though not intrinsically unsafe in themselves, could unduly overload NPP operators.

4.2 International Activities on Nuclear Safety

IAEA missions to nuclear power plants have revealed Y2K issues, but these are not safety critical

WANO, the World Association of Nuclear Operators, has taken initiatives since 1998 to raise awareness and share information amongst its members. The International Atomic Energy Agency (IAEA) has launched a special project to address the Y2K problem for NPPs (particularly in CEEC, NIS and China). It has performed a number of missions to NPP sites. These have revealed a number of Y2K issues although these are generally not in safety critical systems. Instead, they may present a risk to continued operation, and an associated risk of operator overload. The IAEA plans to undertake further missions but it is limited by the unavailability of Western experts.

4.3 EU Nuclear Safety

The rigorous programmes in place throughout the EU, closely monitored by regulators, will be completed by October

All Member States with operating NPPs have a programme to address the issue. Although each programme differs in detail, each requires the licensee to identify systems that might be affected, to rank them by nuclear safety significance, to test each in turn and to modify or replace any that fail. Regulatory authorities are reviewing the content of these programmes and are monitoring their execution.

Some Member State NPP operators reported Y2K readiness at the end of June 1999. Others executed some remediation and test activities during summer shutdown periods, and all plan to end such work by the end of October. All Member States' NPP operators are now preparing risk mitigation and contingency plans. A number of research reactors will be closed over the critical dates. Several regulatory authorities plan to conduct inspections during the autumn, including the examination of contingency plans.

Problems in EU NPPs have been identified and corrected

As an example, the Barsebäck nuclear plant in Sweden, a production reactor, reported that it had discovered fifteen components in its process systems which required correction. A third of this equipment was critical to plant operations and was given priority for corrective action, which was completed in April. In Finland, NPP testing involved resetting system clocks during maintenance breaks to the year 2000.

The systems and components of all German NPP have been classified according to their possible impact on safety and plant operation. In total, 11,000 NPP systems and components were inventoried and checked, of which 120 were found to be non-compliant. The adjustments to be performed on the systems and components relevant to safety or availability were concluded by July 1999 and are in the process of being verified by experts. In German NPPs, safety critical functions as reactor shut down are based on hard-wired control systems. Their functional performance is not influenced by the changing of the date. Exceptions such as digital devices for signal conditioning have been investigated. Some digital devices concerned with plant safety were remediated, such as the rotation speed transducers that control the emergency power diesel generators.

Y2K is discussed regularly with industry groups

The Commission is in regular contact with relevant industrial groups (FORATOM, WANO, EURELECTRIC, UNIPEDE) for information on their activities. The Commission has raised the Y2K issue for discussion with Member State regulators in the relevant working groups, promoting the spread of best regulatory practice. There is no perceived need to increase the Commission's activities with respect to Y2K compliance of NPPs in the Member States, since they report that they are already adequately addressing the issue.

4.4 Nuclear Safety in Central and Eastern European Countries (CEEC) and New Independent States (NIS)

Possible concerns for CEEC and NIS NPPs are worsened by the lack of practical information

Central and Eastern Countries (CEEC) and New Independent States (NIS) are reportedly taking measures, however, it appears that the level of awareness and action is not homogeneous. Given concerns that the preparations of the electricity sector in these countries tend to be less advanced than those of the EU, the likelihood of grid problems arising may be greater, increasing the possibility of problems with ensuring adequate reactor shutdown (cooldown) or of overloading operators. The Commission July grid conference discussed (see section 2.1. on Electricity) the impact of Y2K on EU, CEEC and NIS grids and possibilities for international co-operation, although no concrete actions were identified.

A number of supporting programmes for these nuclear installations exist

Considering the tight time scale and the absence of any mandate for the European Union to take an initiative, the Commission is channelling a major effort on supporting the IAEA [1], WANO [2], ISTC [3], and STCU [4] work.

[1] IAEA: International Atomic Energy Agency.

[2] WANO: World Association of Nuclear Operators.

[3] ISTC: International Science and Technology Centre, Moscow, Russian Federation.

[4] STCU: Science and Technology Centre of Ukraine, Kiev, Ukraine.

At the Commission's request, the issue was addressed at the TACIS on-site assistance meetings organised by WANO in November 1998 and May 1999. In December 1998, the Commission requested TACIS on-site assistance contractors to ensure the Y2K compliance of equipment delivered under EU programmes. In early 1999, the Commission initiated a new inquiry with all EU utilities involved in the on-site assistance programme to raise awareness. The most recent on-site assistance contracts include a provision to address the issue at specific sites. In the framework of the EU TACIS on-site assistance programme, the issue has already been taken up by one contractor at Leningrad NPP.

A TACIS project will carry out an independent review of certain NPPs in Russia and the Ukraine

A specific Tacis support project is being implemented by WANO as Tacis contractor. WANO experts have been visiting designated nuclear power plants in the Ukraine and Russia. The objective of the project is to perform an independent review of the Y2K status and to support contingency planning efforts. This is done in full co-ordination with the IAEA.

Special funds are available to assist Russian and NIS institutions

The ISTC has established a special fund (2 M$) to assist Russian and NIS institutions in solving issues related to the Y2K problem, involving individuals and teams from the former weapon research institutes. A number of project proposals have recently been approved. These projects, developed with the participation of the Russian Ministry of Atomic Energy Minatom and the Russian Ministry of Emergency Situations, will, amongst others, provide direct support to nine nuclear power plants and for the evaluation of nuclear fuel cycle installations. Funding is directed to co-ordination with Minatom, to equipment, software and hardware upgrades, and technical expertise. The STCU is undertaking similar efforts in the Ukraine.

The Commission is also encouraging the exchange of information between nuclear regulators...

The Commission's CONCERT group, (consisting of the senior nuclear regulators of 25 EU, CEEC and NIS countries) has discussed the issue on three occasions since June 1998 in order to increase awareness. All CEEC and NIS nuclear regulatory authorities have action plans, several developed following the first discussion. The content of these plans and their state of progress varies significantly. Some countries report being as well prepared as their EU counterparts, while others are significantly less advanced.

...and providing them with direct assistance

Following requests for specific assistance, the Commission is now providing support to the Bulgarian ,Slovakian, and Russian nuclear regulatory authorities.

The G-24 Nuclear Safety Assistance Co-ordination (NUSAC) secretariat, hosted by the Commission, raised the Y2K issue at its March 1999 meeting. The meeting brings together CEEC and NIS countries and the donors of nuclear safety assistance. The meeting considered the role of donor countries in assessing the Y2K compliance of equipment that they have supplied.

EU countries also carry out bilateral activities

The UK Department of Trade and Industry funded a study [5], the results of which were circulated to utilities participating in the TACIS on-site assistance programme. Finland has provided assistance to the Leningrad NPP near Saint Petersburg and to the NPP in the Kola peninsula. Representatives from Russian nuclear power plants have observed the Y2K preparations carried out by the Loviisa NPP in Finland, which contains Russian-made reactors. Germany is providing assistance to the Ukrainian regulator and NPPs. Further reports on bilateral actions have been requested from Member States.

[5] The Millennium Problem. Raising the awareness of nuclear power station operators and regulatory authorities in Central and Eastern Europe, September 1998

5 TRANSPORT

5.1 Aviation

5.1.1 International Activities in the Aviation Sector

The aviation industry is essentially an international industry, thus the Y2K activities of international organisations, in which EU industry and regulators participate, are very important.

ICAO Member States are reporting on the status of air traffic services, airports, and operators

On the basis of the Y2K assessment criteria developed by the International Civil Aviation Organisation (ICAO), which comprises Air Traffic Services, Airports and Aircraft Operators, and as decided by the ICAO Assembly, the ICAO Member States have been providing information on the compliance status of these services. The original timeframe to respond was 1 July 1999, but replies have been coming in during the summer, and a number of non-EU States have yet to report. The non-respondents are generally not considered to have particular significance for European aviation. The information provided has been made available by ICAO to authorised officials. In order to have an up-to-date view of the situation as it develops, this information will be maintained by the States, as appropriate.

However, some reports are inadequate or incomplete &

As could be expected, the status of compliance and contingency planning varies from country to country, and the extent to which the expected target dates within the last quarter of the year will be met remains an open question. At the same time, country reports are often incomplete and/or vague in their details, thus in such cases a full or accurate picture is not available.

&thus it is not possible to reach an overall assessment of the national or regional situation

A first global readiness status report based on this survey has been prepared by the ICAO secretariat and made publicly available in the latter part of September. However, due to the limited mandate given to the secretariat, the report restricts itself to summary statistics and falls short of providing an assessment of the situation in the different countries or regions.

ICAO has established regional ATS co-ordination centres&

In order to ensure that strategic ATS routes remain open, contingency planning efforts are focusing on providing back-up power and telecom facilities. Eight regional contingency co-ordination centres will be established to collect and disseminate information to the countries of their region, permitting corrective actions of operational contingency measures to overcome any potential disruptions of ATS. A Global Y2K Co-ordination Unit will be operating in Montreal.

&and Eurocontrol will be responsible for co-ordination in the European region

EUROCONTROL has pursued its activity in the area of Air Traffic Management, now focusing particularly on the development of contingency plans. In co-operation with ICAO, Eurocontrol is proceeding with the setting up of a European Regional Y2K Co-ordination Unit (EUR R Y2K CU). This Unit will involve experts to address Y2K problems for the entire ICAO European Air Navigation Region, as well as the interfaces with the other Regions. The Co-ordination Unit will be physically located in the Central Flow Management Unit of Eurocontrol in Brussels, where it will operate on 31.12.1999 and 01.01.2000. A regional "dry-run" exercise on the monitoring and reporting procedures for the European Region is planned for 11 November 1999.

ECAC is trying to obtain information from countries which have not responded to ICAO&

The European Civil Aviation Conference (ECAC), in whose activities the Commission participates, has examined the legal aspects of eventual courses of action being considered in connection with Y2K readiness. They are also examining possible limitations of operations in cases where there is no information on compliance status, and/or there is reason to suspect non-compliance. At an extraordinary meeting of Directors General for Civil Aviation held on 18 October 1999, it was decided that the ECAC President would address the states which have not yet replied to ICAO, indicating that the continued absence of information raises serious questions about permitting flights to/from these states and flights of their air carriers, and requesting that all expected information be provided by 26 November.

& andto resolve outstanding issues where available information is inadequate

Furthermore, for countries where the information provided is considered inadequate, the ECAC Member States were asked to make use of a model letter in addressing these countries, requesting early consultations so as to resolve all outstanding issues before the end of November. The DGCA also noted the possibility to insert in traffic permits reference to potential Y2K problems, thereby reserving the right to suspend the permit if there is no assurance of Y2K compliance. The Co-ordinating Committee of ECAC will examine the situation at the end of November and, if necessary, will convene a special meeting to consider appropriate action.

JAA are ensuring that all types of aircraft are compliant

The Joint Aviation Authorities (JAA) have been pursuing efforts with the ECAC member states and JAA national authorities concerning outstanding issues, such as modifications performed by those who are not type certificate holders, and assessment criteria relating to maintenance organisations. Type certificate holders have already informed the authorities about the satisfactory completion of their plans to ensure a safe transition. The JAA will convene a meeting of all airworthiness authorities of ECAC to cover outstanding issues, and will make contact with two former Eastern countries to obtain information relative to aircraft designed in these countries.

IATA is working closely with the airlines and other parts of the industry

The International Air Transport Association (IATA) has pursued its activity on the Y2K problem, through the Y2K Industry Project which they established in June 1998. This focuses on raising awareness, strengthening industry co-operation, collecting Y2K readiness information, and promoting contingency planning. Through IATA, the airlines have implemented a programme that includes air traffic systems and airports, aircraft, engine, and avionics manufacturers. As part of the project, IATA has been carrying out visits to certain airports and air traffic control services. IATA has been very reassuring about the progress which has been made, and is continuing to be made, on Y2K readiness, and appears confident that the air transport industry will be ready in time to operate safely, without disruption and with minimal impact on capacity. More particularly, as regards aircraft, they do not expect any problems with on-board equipment that could affect the safe conduct of flight operations.

ACI is sharing expertise amongst its members

The Airports Council International (ACI) has co-operated with IATA and continued its efforts with its members, based on a program to increase awareness, to share expertise on methods of solving the problems, and to assist its members in becoming Y2K ready.

5.1.2 Preparations in the EU

Thus there is confidence that the EU aviation sector will be ready in time,&

The overall picture emerging from available information, particularly the reports of the representatives of international government and industry organisations at the Workshop organised by the Commission on 29-30 September, is that the aviation industry appears well advanced in its preparations to combat potential problems in European countries, in accordance with plans aimed at achieving compliance and providing for contingencies that may arise.

European regulators are closely monitoring and assessing the compliance programmes of their aviation sector. In several cases, this is a substantial task. The CAA in the UK, for example, currently authorises over 2000 aviation-related organisations, covering all aspects of the UK civil air transport system from airlines to manufacturers and air traffic service providers. Each of these organisations is engaged in their own individual compliance programmes, which include checking suppliers who may number from tens to hundreds.

Most of the EU's aviation industry expects to complete its preparations during the third quarter of 1999. Interface tests are taking place with neighbouring air traffic service providers. Some sectors are already compliant. Both the UK National Air Traffic Services (NATS) and the German air traffic control GmbH (DFS) have completed their programmes and stated that all their systems are compliant.

&although it is possible that there may be capacity constraints&

In Europe, contingency plans are being based on the normal contingency plans for the sector and cover immediate safety concerns satisfactorily, however, the possibility of capacity constraints in the days after the roll over cannot be excluded. In view of the international nature of aviation, national organisations are waiting for international plans to be completed before they can finalise their own plans. Generally, countries will require all aircraft to prove Y2K compliance and may refuse admission to national airspace where they cannot do so, they will also insist that national airlines demonstrate that the routes and destinations which they have chosen to fly to are safe. Operators which are not compliant may face the suspension of licenses and operations.

In the Netherlands, additional consideration is being given to alleviating the burden on the national air traffic system by keeping only Schiphol Airport open on the critical dates, as well as the possibility of keeping regional airports on stand-by and reserving military airfields for extra capacity. They may also decide to limit the number of flights by allowing only essential commercial air traffic and emergency flights, and prohibiting all other flights.

...and some residual uncertainty regarding the situation in neighbouring regions

There is confidence regarding the compliance of the Western European industry, but uncertainty persists concerning the risks associated with cross-border interactions with regions neighbouring the European Union. Information provided through the International Civil Aviation Organisation is often either incomplete or leaves questions open in this respect, and authorities concerned will be trying to obtain missing and clear information, so as to be in a position to take measures that may appear necessary.

5.2 Maritime Transport

Recent findings indicate the level of non-compliant vessel equipment is very low

Further testing of systems and development of contingency plans has continued with progress being reported in many areas. The main risk to any ship is to its ability to navigate safely. The shipping sector has assessed Y2K compliance and developed a replacement and contingency programme to overcome the potential problems identified. However, all ships have a built-in contingency mechanism to cope with the failure of electronic equipment relating to navigation, resulting in reversion to manual methods. One of the key EU ports, the port of Rotterdam, has reported that, on the basis of their most recent findings, only 2-3% of vessel equipment inspected has been found to be non-Y2K compliant, representing a reduction from the previous estimate of 10%.

Legal aspects relating to shipping are being addressed by the IMO

From the shipping industry, developments concerning the IMO's Code of Good Practice were reported, in particular concerning the threat of legal action resulting from non-implementation of contingency measures. To counter this, the industry has developed the Y2K Safety Protocol. The aim is to create a protective climate for those following the Code of Good Practice from legal liability and commercial pressures through public support from the major transportation agencies and the understanding of the legal fraternity. To give legal certainty to the Code and the Protocol, BIMCO has introduced a standard incorporation clause for charter agreements and bills of lading.

EU ports seem to be progressing&

A number of governments have reported progress in the industry. As an example, the UK's latest state of play shows its ports to be fully tested and compliant. Replies to questionnaires sent out to Rotterdam port users in August 1999 showed around 13% to be non-compliant, although this figure is constantly improving. Ports throughout the EU may close or restrict vessel movements, as well as operations such as cargo handling and refuelling for a time over the critical period. Additional safety precautions on shipping entering the port may also be required.

&and a number of contingency measures are being considered

For instance, non-compliant users will be barred from navigating in the Port of Rotterdam for a period of 28 hours - the 14 hours immediately preceding and following midnight on 31 December. Indeed, no ship will be allowed to navigate on Dutch national waterways during this period unless they can demonstrate compliance. Furthermore, the Dutch authorities may take additional traffic measures, including a ban on overtaking, speed limits, the compulsory use of pilots, a ban on remote piloting, and compulsory assistance from tugs. Additional conditions may be imposed on particular categories of vessels. Ships with a potentially hazardous cargo must provide evidence that they are Y2K compliant, even if they are not sailing. Hazardous substances may only be loaded or unloaded with the permission of the competent authorities.

5.3 Rail Transport

The rail sector preparations are progressing as planned&

Rail transport operators and rail infrastructure managers in the EU have, together with their manufacturers, continued to perform compliance testing. Contingency plans covering many systems have been reported, and equipment testing is stated to be going ahead as planned. According to data available from the International Union of Railways, UIC, and the companies themselves, the industry appears confident that considerable progress has been achieved. There is still much work to be done in all sectors but the general view is that they will be prepared by year end.

In common with other operators, Deutsche Bahn AG reported various Y2K activities in progress, such as a project for central (commercial) software and another to provide central co-ordination. More than 100,000 systems have been identified and assessed for compliance. An integrated, overall emergency management project involves all areas of DB AG, including railway stations and services, travel information and bookings, cargo, and energy. National and regional monitoring centres for the rollover are being established.

&although train services will be interrupted at midnight in several countries

There is, however, a recent tendency to suspend operations over the critical period (e.g. SNCF and Deutsche Bahn will interrupt their train services from 23.50 to 00.15 hours). According to the information available, this should be seen as an additional precautionary measure and does not necessarily reflect concerns regarding compliance. In the Netherlands, no rail transport takes place during any year end period for several hours before and after midnight on 31 December.

5.4 Road Transport

Road transport systems are being dealt with by local authorities

In most instances, road systems are the responsibility of local authorities, thus few EU countries are addressing this sector at national level. Countries report that local authorities are examining their operating equipment and the traffic and electrical devices controlled by computer programmes. Included are traffic light systems (controlled by programmes which make use of the calendar), data acquisition units such as permanent census points and measuring loops with stops at intervals, equipment affecting traffic flows on motorways and highways, traffic computer centres, and other operating equipment, such as tunnel installations, communications equipment, and lighting systems.

Assessments are being carried out in some countries

An independent assessment has been made of the readiness of all roads in the UK. For motorways and trunk roads this has been carried out by peer reviews carried out by the Welsh Office, Scottish Office, the Roads Service, Northern Ireland and the Highways Agency. Traffic and control equipment on motorways and trunk roads was found to be clear from risk of material disruption. Road management systems are nearly ready.

Generally, there appears to be few, if any, problems related to critical systems in this sector

In the private sector, attention is being focused on transport logistics chains, due to their importance for trade and the economy. The road sector is regarded as a low risk sector, where the problems which have been identified tend to affect less critical systems. The members of ASECAP, the association of European licensees of toll motorways, have examined the possible impact of Y2K on their activities and have found no critical technological issues. The continued safety of drivers and of their staff, which is at the top of their priorities, is not in question. The only problem which has been discovered concerns toll systems. These are now highly automated and have required a thorough review. ASECAP is thus confident that all problems have been taken care of and that their systems are ready.

6 TELECOMMUNICATIONS

The telecommunication infrastructure is vital, but also robust and reliable

The telecommunication infrastructure has been characterised as indispensable, since it is relied upon by other utility infrastructures such as energy, aviation, water and gas supply, and underpins business and commerce. Although the core of the telecommunication infrastructure is very robust and reliable, vulnerabilities are likely to exist in the infrastructure on business customer premises, which are not visible to telecommunication providers.

6.1 Key risks/threats/dependencies

The key risk is therefore associated with congestion, and the possible interference with emergency services

Despite the optimism regarding the robustness of the infrastructure, the potential for congested networks to experience interference in access to emergency numbers and services remains an issue, primarily due to the possibility of unusually heavy customer demand occurring at year end. Unlike many other major infrastructures, telecommunications is one upon which greater than normal loads are expected over periods such as a New Year. For this year, it is expected that these loads will be further increased. Telecommunication operators are addressing this risk, by dimensioning their network capacity both nationally and internationally to cope with higher load levels.

Congestion will nevertheless continue to be a risk, particularly regarding access to emergency numbers. Most operators possess the technical means to give priority to such numbers, but for many countries such a step requires a clear mandate from regulators and other authorities.

Information to customers should prevent unusual human behaviour

There is another risk associated with unusual patterns of customer demand over the transition period which could have a negative impact on infrastructures, including telecommunications. Appropriate information should be provided to the public in order to avoid having them continuously checking the availability of normal services during the rollover. This in itself might, on a global scale, produce more severe disruptions than Y2K.

Finally, an important source of uncertainty, and therefore a potential risk, is the state of readiness of most SMEs in this sector, for whom very little information is available.

6.2 Contingency planning and rollover preparations

Extensive global testing of components, systems, and interfaces has taken place

Extensive compliance testing campaigns at the component and systems level have been carried out both on network elements, as well as on the interfaces between networks. To date, no problems have been noted. Recently, the main activity of telecommunication infrastructure providers has been to develop and verify Business Continuity Plans (BCPs). The purpose of these plans is to minimise unavoidable risks. Thus BCPs will not replace normal operational procedures, which are already able to handle many types of problems, but would be an additional overlay to cope with unforeseen situations.

At the international level, the ITU has played an important role in developing awareness and providing support to telecommunication operators in their preparations and planning for the vast majority of countries worldwide.

Large users are now finalising continuity plans, the status of SMEs is less certain

On the user side, most of the large corporate users have completed their task of making their systems Y2K compliant. Current work is focused on testing and verifying their BCPs. Conversely, the state of readiness of most SMEs is still unclear, especially very small companies ( Service > Year2000 (Wiener Börse AG)

Belgium http://www.nbb.be/sg/e/geninfo/p25e.htm (National bank)

http://fortisbank.com/fben/index.asp

http://www.kbc.be/kbc2000/en/index_en.html

http://www.bxs.be/bxs_gb.html > Year 2000 (BXS Brussels Exchange)

Denmark http://www.xcse.dk/uk/nyt/pressemeddelelser/90226uk.asp (Copenhagen Stock Exchange)

Finland http://www.bof.fi (Bank of Finland)

http://www.rata.bof.fi/english/Faq/Faq.html (Finnish Supervisory Authority)

http://www.hex.fi/y2k/index.html (Helsinki Stock Exchange)

http://www.vakes.fi/svk (Federation of Finnish Insurance Companies)

http://www.vn.fi/stm/suomi/vastuual/vast01fr.htm

France http://www.afb.fr/pascfonb.htm

http://www.paribas.com

http://www.bourse-de-paris.fr/an2000/en/first/fs01.htm (Paris Bourse SBF SA)

Germany http://www.bakred.de (Bundesaufsichtsamt für das Kreditwesen)

http://www.bundesbank.de (Deutsche Bundesbank)

http://www.bav-bund.de (Bundesaufsichtsamt für das Versicherungswesen)

http://www.bawe.de (Bundesaufsichtsamt für den Wertpapierhandel)

http://www.exchange.de/index.html > Year 2000 Project (Deutsche Börse AG )

Greece http://www.hba.gr

http://www.ase.gr>Announcements>Year 2000 (Athens Stock Exchange)

Iceland http://www.vi.is > English (Iceland Stock Exchange)

Ireland http://www.ise.ie/senews/frcontent.htm (Irish Stock Exchange)

Italy http://www.bancaditalia.it

http://www.cipa.it

Luxembourg http://www.bourse.lu/uk/an2000gb.htm (Luxembourg Stock Exchange)

Netherlands http://www.dnb.nl

http://www.verzekeringskamer.nl (insurance)

Norway http://www.finans.dep.no

http://www.ose.no/y2k/ (Oslo Stock Exchange)

Portugal http://interbolsa.pt/index.htm

http://www.bvl.pt/eng/Year_2000_en_main.html (Lisbon Stock Exchange)

http://www.bdp.pt/bdp/indexi.html > Year 2000 (Porto Futures and Options Exchange)

Spain http://www.cnmv.es/A2000/efecto2000.htm

http://www.ipyme.org/inipyme/prog4.htm

http://www.bolsamadrid.es/mse/infogen/y2k.htm (Madrid Stock Exchange)

http://www.meff.es/news/index.htm > MEF and Year 2000 (MEFF RF) http://www.meffrv.es/ing/indexi.htm > Year 2000 (MEFF RV)

http://www.bde.es/infogene/y2000.htm (Bank of Spain)

http://www.bancosantanader.bsch.es/efecto2000.htm (Bank of Santander)

http://www.bbv.es/BBV/grupobbv/efecto.html (Bank Bilbao Biscay)

Sweden http://www.fi.se/fffs/1998/fs9818.htm

http://www.omgroup.com/pdf%20files/om2k.pdf (OM Stockholm Exchange)

Switzerland http://www.swissbanking.org/e/Pages/swissbanking.htm

UK http://www.bba.org.uk (information by the BBA on UK financial sector preparations)

http://www.bankofengland.co.uk (contains the Bank of England's "Blue Book")

http://www.londonstockexuser.co.uk/y2k/index.htm (London Stock Exchange)

http://www.ipe.uk.com>bulletin board/news.html (IPE London)

http://www.liffe.com > Year 2000 (LIFFE)

http://www.lme.co.uk/summary1.pdf (London Metal Exchange)

http://www.fsa.gov.uk (FSA)

For the water sector:

Austria http://www. sbl.co.at

http:// www.magwien.gv.at/ma31

Denmark http://www.dkvand.dk/index1.htm

http://www.kl.dk/siab.asp-o_id=1869

Finland http://www.vvy.fi

France http://www.generale-des-eaux.com

http://www.suez-lyonnaise-eaux.fr

http:// www.bouygues.fr

Norway http://www.norvar.no

Spain http://www.mma.es/2000.htm

http://www.servicom.es/aes/aeas.htm

Sweden http://www.slv.se/vatten/index.htm

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