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Proactive game plan for city utilities.

The Board of Public Utilities (BPU) produces and supplies the City of Kansas City and several surrounding jurisdictions with water and electric energy for domestic and industrial purposes and for public use in the city, with authority to sell and dispose of any surplus outside the city. The utility system presently serves approximately 67,000 electric and 53,000 water customers.

As the BPU's assistant general manager for finance, I am responsible for the administrative oversight of all financial and management support functions of the BPU. As the former director of finance and budget for Kansas City, I understood the need for a comprehensive strategy for year 2000 compliance issues, but have found municipal utility finance compliance issues to be even more complicated with the pressing issue of open competition in the electric utility industry.

One of the first questions I asked management staff, as I assumed the duties of CFO, was, "What is the BPU's strategy in addressing year 2000 issues throughout the entire utility operation?" Fortunately, the BPU has been proactive in developing a sound game plan to assess and research any programming changes necessary to address any related year 2000 problems. Staff have been anticipating this problem since the late 1980s, and all programs written since then use a four-digit year. Some of the programs that we use on a regular basis were written in 1990 or earlier. Fortunately many of those older programs store the date with two digits, but do not use them for comparisons or calculations.

Our financial accounting and management reporting systems were purchased from outside vendors that committed to having all year 2000 issues corrected by the fourth quarter of 1998. We do not have major concerns that we will have problems with our accounting, payroll, payments to vendors, customer billing, budgeting, or other financial accounting-related functions.

The BPU's 1997 and 1998 budgets include programming resources to resolve the internal system programming implementations that have been identified. Approximately $1.2 million has been dedicated over the past four years to address just the core financial system requirements in areas such as central stores and inventory control, customer billings and meter readings, payroll and time and attendance systems, capital project tracking, purchasing, and the core general ledger system applications. Additionally, the utility has outsourced much of its year 2000 programming and testing requirements.

The BPU is also addressing other utility system applications, including telecommunication systems, voice mail, security systems, load dispatch systems, document management and imaging systems, power plant controls and systems, mapping and drawing, electric transmission distribution analysis systems, water laboratory systems, and water supervisory control and data acquisition systems.

The main objectives of the BPU's utilitywide assessment have included:

* establishment of an enterprisewide view of all the utility's millennium compliance components,

* facilitation of internal and external communication about year 2000 issues,

* mitigation of risks associated with compliance,

* validation of application testing, and

* ensuring a comprehensive approach for ongoing business relationships.

We are also asking our major suppliers and vendors about their compliance, to ensure good business planning with firms we contract with for supplies, materials, and services. This includes surveying our major financial institutions holding operating and long-term investments, bond trustees, and pension plan fund managers and custodians.

I am also frequently answering questionnaires from our large industrial customers who are also surveying their major suppliers asking what BPU's strategic plan is to address pressing millennium issues. Our industrial partners want to make sure their lights and water are running on January 1, 2000.

The BPU continues to assess all system applications to ensure that date comparison issues with the year 2000 are addressed in a coordinated and financially prudent manner while minimizing the impact on both staffing and financial resources. I believe our strategy has been carefully executed to date and will be an integral part of our future success as we enter the next century and face issues such as competition and deregulation.

Nancy L. Zielke, Assistant General Manager for Finance, Board of Public Utilities of Kansas City, Kansas
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Title Annotation:Kansas City, KS' Board of Public Utilities' preparation for the year 2000 transition problem
Author:Zielke, Nancy L.
Publication:Government Finance Review
Date:Jun 1, 1998
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